Tuesday 10 December 2013
IAS 41 Agriculture provides guidance on the accounting for agricultural activity. From initial recognition up to the point of harvest, it requires the measurement of biological assets at fair value less costs to sell.
This project is a limited-scope improvement to IAS 41 to address bearer biological assets.
IAS 41 measures biological assets related to agricultural activity at fair value less costs to sell, based on the principle that biological transformation is best reflected by fair value measurement. IAS 41 uses a single treatment for both bearer biological assets and consumable biological assets. Bearer biological assets include grape vines, oil palms, dairy cows, etc. Consumable biological assets include wheat, trees for wood pulp in a plantation forest, beef cattle, etc.
The biological transformation associated with mature bearer biological assets occurs principally in the produce growing in/on the bearer biological asset. Therefore, the operation of mature bearer biological assets is seen by many as similar to that of manufacturing and, consequently, they believe that such assets should be accounted for in accordance with the requirements in IAS 16 Property, Plant and Equipment rather than IAS 41.
IASB issues proposals on bearer plants
IASB staff proposed adding a limited-scope project on bearer biological assets to IASB agenda
Board gives priority to develop a proposal to amend IAS 41 for bearer biological assets
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