Biological assets are measured on, and after, initial recognition at fair value less estimated point-of-sale costs. IAS 41 Agriculture does not address the treatment of expenditure after initial recognition of a biological asset, because it was considered unnecessary under a fair value approach. However, the proposed amendment to IAS 23 Borrowing Costs to require capitalisation would force entities to change their systems to capitalise the interest costs, only then to write them off when remeasuring the assets to fair value.
At its meeting in March 2006, the Board decided to exclude from the scope of IAS 23 qualifying assets measured on initial recognition at fair value, such as biological assets. The Board decided that black letter paragraphs should be changed editorially to improve their style.