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The IFRS for SMEs Accounting Standard Update is a staff summary of news, events and other information about the IFRS for SMEs® Accounting Standard (Standard) and related SME activities. The staff summary has not been reviewed by the International Accounting Standards Board (IASB).

This edition of the IFRS for SMEs Accounting Standard Update includes:

Topic of the quarter—Accounting for agricultural activities

Section 34 Specialised Activities in the third edition of the IFRS for SMEs Accounting Standard (Standard) sets out requirements for SMEs that are involved in agriculture, extractive activities and service concession arrangements. This IFRS for SMEs Accounting Standards Update spotlights the requirements for agriculture that were updated in the third edition of the Standard.

In developing the third edition of the Standard, the IASB made two changes to the requirements for agriculture, namely:

  1. adding a requirement to account for bearer plants that can, at initial recognition, be measured separately without undue cost or effort, in accordance with Section 17 Property, Plant and Equipment; and
  2. moving the guidance on fair value measurement out of Section 34 and into the new Section 12 Fair Value Measurement.

In adding the requirements in Section 34 for bearer plants, the IASB included the amendment made to IAS 41 Agriculture in 2014—Agriculture: Bearer Plants. The requirements for agriculture in earlier editions of the Standard are also based on IAS 41.

Definitions

Agricultural activity is the management by an entity of the biological transformation of biological assets for sale, into agricultural produce or into additional biological assets.

Agricultural produce is the harvested product of an entity’s biological assets and is measured at its fair value less costs to sell at the point of harvest.

A bearer plant is a living plant that is used in the production or supply of agricultural produce; is expected to bear produce for more than one period; and has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.

A biological asset is a living animal or plant.

Scope—Agriculture

Section 34 does not apply to bearer plants that, at initial recognition, can be measured, both initially and on an ongoing basis, separately from the produce on them without undue cost or effort. In this case, an entity applies Section 17. However, Section 34 applies to the produce on those bearer plants.

For an entity’s biological assets to be in the scope of Section 34, the entity must be managing the biological transformation of biological assets for sale into agricultural produce or into additional biological assets (agricultural activity). Such management distinguishes agricultural activity from other activities. For example, harvesting from unmanaged sources (such as ocean fishing and deforestation) is not agricultural activity. Agricultural activities do not include using animals for competitions, racing or exhibitions.

Biological assets

An SME recognises a biological asset or agricultural produce when it controls the asset as a result of past events; it is probable that future economic benefits associated with the asset will flow to the entity; and the fair value or cost of the asset can be measured reliably without undue cost or effort.

An SME does not have a free choice in measuring its biological assets. It must use the fair value model for all classes of biological assets for which fair value is readily determinable without undue cost or effort. Where the fair value is not readily determinable without undue cost or effort, biological assets are measured using the cost model.

Applying the fair value model, an SME measures a biological asset at its fair value less costs to sell. Section 12 provides guidance on fair value measurement.

Bearer plants

A bearer plant is a class of biological asset that is held by an entity solely to grow produce over its productive life. After this time, the plants are usually scrapped. Consequently, the only significant future economic benefits from bearer plants arise from selling the agricultural produce that they create. To be a bearer plant, a biological asset must meet all these conditions:

  1. it is a living plant;
  2. it is used in the production or supply of agricultural produce;
  3. it is expected to bear produce for more than one period; and
  4. it has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.

Bearer plants meet the definition of property, plant and equipment. The use of mature bearer plants to yield agricultural produce is similar to the use of property, plant and equipment to manufacture goods.

If a biological asset meets the definition of a bearer plant and it can be measured separately from the produce growing on it without undue cost or effort, then it is in the scope of Section 17, not Section 34. Plants such as tea bushes, grape vines, oil palms and rubber trees often meet the definition of a bearer plant. The produce growing on the bearer plant, however, is always in the scope of Section 34. For example, the tea leaves, grapes, oil palm fruit and latex are within the scope of Section 34 while they are attached to the bearer plant.

If a bearer plant cannot be measured separately from the produce growing on it without undue cost or effort, then the entire bearer plant (including the produce on it) is within the scope of Section 34.

Figure 1 illustrates how to identify the appropriate accounting treatment for bearer plants:

Figure 1—Identifying the accounting treatment for bearer plants

Applying the undue cost or effort exemptions in Section 34

Entities with agricultural activities might need to make an undue cost or effort assessment in two situations:

  1. when initially recognising a bearer plant—assessing whether the plant can be measured separately (both initially and on an ongoing basis) from the produce growing on it without undue cost or effort. This assessment determines whether the bearer plant is in the scope of Section 17 or Section 34.
  2. when determining the measurement basis for each class of biological assets in the scope of Section 34—assessing whether fair value is readily determinable without undue cost or effort. This assessment determines whether the fair value model is used to measure a class of biological assets.

Example—Agricultural activity

An SME grows cacao to sell to chocolate factories. Its statement of financial position at 31 December 20X8 recognises two tractors, three computers and software to manage the cultivation of cacao on its farmland, which is planted with 10,000 cacao-bearing trees. The SME’s assets also include 1,000 pods of recently harvested cacao.

The SME is engaged in agricultural activity relating to the cacao-bearing trees—the SME manages the biological transformation of the cacao-bearing trees into agricultural produce (harvested cacao) for sale. The cacao-bearing trees are biological assets (living plants). Therefore, the SME will need to determine whether the trees are in the scope of Section 17 or Section 34. The SME makes the determination that it can measure the cacao-bearing trees separately and on an ongoing basis without undue cost and effort. As a result, it recognises the trees separately as property, plant and equipment under Section 17.

Section 34 will apply to the cacao pods growing on the trees even if the trees are in the scope of Section 17.

The following assets are not biological assets, so the SME does not account for them in accordance with Section 34. Instead, the SME accounts for:

  1. the harvested cacao after initial recognition in accordance with Section 13 Inventories;
  2. the tractors, farmland and computers in accordance with Section 17 (and, if they are under leases, Section 20 Leases); and
  3. the software in accordance with Section 18 Intangible Assets other than Goodwill.

If you found this example useful, remember that our educational material on Section 34 contains this and many other examples to assist you with its application.

Exposure Draft Consolidation Exception

In May 2026, the IASB published the Exposure Draft Consolidation Exception, which addresses a question that was raised to the SMEIG. The comment period closed on 9 September 2026.

In the Exposure Draft, the IASB is proposing to introduce an exception so that an SME that is an intermediate parent with an investment entity parent is no longer required to prepare consolidated financial statements, provided that the investment entity parent prepares financial statements applying full IFRS Accounting Standards in which investments in subsidiaries are measured at fair value through profit or loss in accordance with IFRS 10 Consolidated Financial Statements (see Figure 2).

Now that the comment period has closed, IASB members and staff will discuss the feedback with the SMEIG in October 2026, and the IASB will discuss it later that month. Both meetings will be available to view online so that you can follow the progress of the project.

Figure 2—The IASB’s proposal in the Exposure Draft Consolidation Exception

Call for candidates for the SMEIG

The SMEIG is a consultative group for the IASB. It was created to support the global adoption and application of the Standard.

The SMEIG currently has 12 members, and the Trustees of the IFRS Foundation are seeking new members to ensure the group continues to have good representation from a range of backgrounds and geographical regions.

You can see more information about the role and how to submit an application via our job board.

SMEIG members are appointed for an initial three-year term and are then eligible to put themselves forward for reappointment for a second three-year term.

Resources to support implementation of the Standard

Resources published since the June 2026 IFRS for SMEs Accounting Standard Update

To support implementation of the third edition of the Standard, the IASB has published supporting materials comprising:

Resources published before the June 2026 IFRS for SMEs Accounting Standard Update

To support implementation of the third edition of the Standard, the IASB has published supporting materials comprising:

Global adoption of the IFRS for SMEs Accounting Standard

We are pleased to welcome Samoa to the jurisdictions that require or permit the IFRS for SMEs Accounting Standard. A new jurisdictional profile for Samoa was recently published on the IFRS Foundation’s website. The Standard is now required or permitted in 88 jurisdictions illustrated on the map (see Figure 3). (Note that some small island jurisdictions are not illustrated on the map).

Figure 3—Jurisdictions that require or permit the IFRS for SMEs Accounting Standard