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IAS 41 prescribes the accounting treatment, financial statement presentation, and disclosures related to agricultural activity. Agricultural activity is the management of the biological transformation of biological assets (living animals or plants) and harvest of biological assets for sale or for conversion into agricultural produce or into additional biological assets.
IAS 41 establishes the accounting treatment for biological assets during their growth, degeneration, production and procreation, and for the initial measurement of agricultural produce at the point of harvest. It does not deal with processing of agricultural produce after harvest (for example, processing grapes into wine, or wool into yarn). IAS 41 contains the following accounting requirements:
- bearer plants are accounted for using IAS 16;
- other biological assets are measured at fair value less costs to sell;
- agricultural produce at the point of harvest is also measured at fair value less costs to sell;
- changes in the fair value of biological assets are included in profit or loss; and
- biological assets attached to land (for example, trees in a plantation forest) are measured separately from the land.
The fair value of a biological asset or agricultural produce is its market price less any costs to sell the produce. Costs to sell include commissions, levies, and transfer taxes and duties.
IAS 41 differs from IAS 20 with regard to recognition of government grants. Unconditional grants related to biological assets measured at fair value less costs to sell are recognised as income when the grant becomes receivable. Conditional grants are recognised as income only when the conditions attaching to the grant are met.
Standard history
In April 2001 the International Accounting Standards Board (Board) adopted IAS 41 Agriculture, which had originally been issued by the International Accounting Standards Committee in February 2001.
In December 2003 the Board issued a revised IAS 41 as part of its initial agenda of technical projects.
In June 2014 the Board amended the scope of IAS 16 Property, Plant and Equipment to include bearer plants related to agricultural activity. Bearer plants related to agricultural activity were previously within the scope of IAS 41. However, IAS 41 applies to the produce growing on those bearer plants.
Other Standards have made minor consequential amendments to IAS 41, including IFRS 13 Fair Value Measurement (issued May 2011), IFRS 16 Leases (issued January 2016), Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018) and Annual Improvements to IFRS Standards 2018–2020 (issued May 2020).
