IAS 41

Agriculture
*Note that this topic is not included in the Course Readings book

Issued (Revised)
2001 (2003, 2014)
1
Objective of IAS 41
Prescribes the accounting treatment,
financial statement presentation, and
disclosures related to agricultural activity
Agricultural activity is the management by an
entity of the biological transformation of living
animals or plants (biological assets) for sale,
into agricultural produce, or into additional
biological assets.
There is no comparable standard under
U.S. GAAP
2
Living is important
3
Biological assets Agricultural produce Products that are the result
of processing after harvest
Sheep Wool Yarn, carpet
Trees in a plantation forest Felled trees Logs, lumber
Plants Cotton Thread, clothing
Harvested cane Sugar
Dairy cattle Milk Cheese
Pigs Carcass Sausages, cured hams
Bushes Leaf Tea, cured tobacco
Vines Grapes Wine
Fruit trees Picked fruit Processed fruit
Source: IAS 41
Measurement of Biological Assets
Question: Which value do you think
biological assets should be measured at:
Historical cost
Fair value
4
Measurement of Biological Assets
IAS 41 chose fair value less costs to sell
Except when fair value cannot be measured reliably
Cost A/Depr A/Impairments = BV
Once fair value becomes reliably measurable fair value less
costs to sell
Gain or loss is recognized in current income
(different from IAS 16 which uses a Revaluation
Surplus )



5
Bearer Plants
Bearer plants are used solely to grow produce over several periods
and at the end of their productive lives they are usually scrapped
At the 2011 meeting of National Standard Setters (NSS) the
Malaysian Accounting Standards Board (MASB):
argued that the resulting fluctuations from internally determined fair values are
not reflective of value
requested that the IASB reconsider the accounting treatment for bearer plants
June 30, 2014 (so last week!): Amendment to IAS 16 and IAS 41
Bearer plants are now accounted for in the same way as PPE because their
operation is similar to that of manufacturing
Bearer plants are now included within the scope of IAS 16, instead of IAS 41.
The produce growing on bearer plants will remain within the scope of IAS 41.
6