 PAS 41

Agriculture
 Introduction
Agriculture means farming or the process of producing crops and raising livestock. PAS 41 prescribes the
accounting and disclosures for agricultural and related activity.
PAS 41 applies to the following when they relate to agricultural activity:
a. Biological assets, except bearer plants;
b. Agricultural produce at the point of harvest; and
c. Unconditional government grants related to a biological asset measured at its fair value less cost to sell
PAS 41 does not apply to the following:
a. Land related to agricultural activity (PAS 16 and PAS 40).
b. Bearer plants (PAS 16). However, PAS 41 applies to the produce on those bearer plants.
c. Government grants related to bearer plants (PAS 20).
d. Intangible assets related to agricultural activity (PAS 38).
PAS 41 applies to agricultural produce only at the point of harvest. After harvest, PAS 2 Inventories or other
applicable standard is applied.
 Biological Assets
Biological asset is “a living animal or plant”. “Bio” means life. Therefore, dead animals, dead plants and other non-
living things cannot qualify as biological assets.
Biological assets can be either:
a. Consumable biological assets – “those that are to be harvested as agricultural produce or sold as
biological assets”. Examples:
i. Livestock intended for the production of meat
ii. Livestock held for sale
iii. Fish in farms
iv. Crops such as maize and wheat
v. Produce on a bearer plant
vi. Trees being grown for lumber
b. Bearer biological assets – those that are held to bear produce. Only the produce is harvested while the
bearer biological asset remains. Examples:
i. Livestock from which milk is produced
ii. Fruit trees from which fruit is harvested
Living animals, whether consumable or bearer, are classified as biological assets if they relate to agricultural
activity. However, living plants are classified as biological assets only if they are consumable. Bearer plants are
classified as PPE.
Bearer plant is “a living plant that:
a. Is used in the production or supply of agricultural produce;
b. Is expected to bear produce for more than one period; and
c. Has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales”.
Plants that are to be harvested as agricultural produce are not bearer plants. For example, a tree that is intended
to be cut down and used as lumber is a consumable plant, and therefore classified as biological asset. A tree that
is intended to bear fruits and only the fruits are harvested while the tree remains is a bearer plant, and therefore
classified as property, plant and equipment.
Bearer plant that may be sold as scrap when no longer used are not necessarily precluded from being classified as
bearer plants.
Annual crops and similar plants that die once their produce has been harvested are considered consumable plants,
and therefore classified as biological asset. Examples: peanut, rice, beans, sugarcane, tobacco, banana, garlic
onion, lettuce, cabbage, carrots, and the like. Only plants that bear produce repeatedly over a long period of time
are considered bearer plants (PPE).
 Agricultural Produce
Agricultural produce is “the harvested produce of the entity’s biological assets”.
Harvest is “the detachment of produce from a biological asset or the cessation of a biological asset’s life
processes”.
Agricultural produce refers to those that are in their natural state and are not yet processed. Those that are
already subjected to processing are treated as inventories.
 Agricultural Activity
Biological assets and agricultural produce are accounted for under PAS 41 only when they relate to agricultural
activity. Those that do not relate to agricultural activity are accounted for under other applicable Standards. For
example, plants used in landscaping are not biological assets but rather land improvements (i.e., PPE).
Agricultural activity is “the management by an entity of the biological transformation and harvest of biological
assets for sale or for conversion into agricultural produce or into additional biological assets”.
Examples of agricultural activities include: raising livestock, forestry, annual or perennial cropping, cultivating
orchards and plantations, floriculture, and aquaculture (including fish farming).
 The following are the common features of agricultural activities:
a. Capability to change – living animals and plants are capable of biological transformation;
b. Management of change – management facilitates biological transformation by enhancing, or at least
stabilizing, conditions necessary for the process to take place. Such management distinguishes agricultural
activity from other activities. For example, harvesting from unmanaged sources (such as ocean fishing and
deforestation) is not agricultural activity; and
c. Measurement of change – the change in quality or quantity brought about by biological transformation or
harvest is measured and monitored as a routine management function
 Biological Transformation – comprises the following processes that cause qualitative or quantitative
changes in a biological asset:
I. Asset changes through:
a. Growth – is an increase in quantity or improvement in quality of an animal or plant.
b. Procreation – is the creation of additional living animals or plants.
c. Degeneration – is a decrease in the quantity or deterioration in quality of an animal or plant.
II. Production of agricultural produce.
 Recognition
A biological asset or agricultural produce is recognized when it meets the asset recognition criteria, including the
reliable measurement of its fair value or cost.
 Measurement
Biological assets are initially and subsequently measure at fair value less costs to sell. The gain or loss arising from
initial measurement and subsequent changes in fair value less costs to sell are recognized in profit or loss.
A gain may arise on the initial recognition of a biological asset, for example, when a calf is born. A loss may arise on
the initial recognition of a biological asset because costs to sell are deducted from fair value.
Biological assets whose fair value cannot be reliably determined on initial recognition are initially measured at cost
and subsequently measured at cost less accumulated depreciation and accumulated impairment losses. Once the
fair value becomes reliably measurable, the biological asset is measured at its fair value less costs to sell.
Agricultural produce is, in all cases, initially measured at fair value less costs to sell at the point of harvest. This will
be the deemed cost for subsequent accounting using PAS 2 or another applicable Standard. The gain or loss arising
from the initial measurement is recognized in profit or loss.
 Fair value – is “the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date”.
 Costs to sell – are the incremental costs directly attributable to the disposal of an asset, excluding finance
costs and income taxes.
An entity uses PFRS 13 Fair Value Measurement when measuring the fair value of biological assets and agricultural
produce. Fair value measurement may be facilitated by grouping biological assets or agricultural produce according
to significant attributes, such as age and quality.
Contract prices are not necessarily relevant when measuring fair value. Accordingly, fair value is not adjusted by
the existence of a contract.
Cash flows on finance costs, taxes, and costs of reestablishing biological assets after harvest (e.g., the cost of
replanting after harvest) are not considered when measuring fair value.
“Cost may sometimes approximate fair value, particularly when:
 i. Little biological transformation has taken place since initial cost incurrence (e.g., seedlings planted
immediately prior to the end of a reporting period or newly acquired livestock); or
ii. The impact of the biological transformation on price is not expected to be material (e.g., the initial growth
in a 30-year pine tree plantation production cycle).”
Biological assets attached to land (e.g., trees in a plantation forest) may not have a separate market but an active
market may exist for the combined assets (i.e., biological assets, raw land, and land improvements) a package. In
such case, the fair value of the raw land and land improvements may be deducted from the fair value of the
combined assets to arrive at the fair value of the biological assets.
A biological asset that is previously measured at fair value less costs to sell is continued to be measured at fair
value less costs to sell until it is disposed of.
 Government Grants
Only government grants that are related to biological assets measured at fair value less costs to sell are accounted
for under PAS 41. Those that are related to biological assets measured at cost less accumulated depreciation and
accumulated impairment losses are accounted for under PAS 20.
Under PAS 41, if the government grant is:
a. Unconditional – the grant is recognized in profit or loss when it becomes receivable.
b. Conditional – the grant is recognized in profit or loss when the attached conditions are met.
c. Conditional but the terms of the grant allow part of it to be retained according to the time that has
elapsed – a portion of the grant is recognized in profit or loss as time passes (e.g., on a straight-line basis).
 Disclosure
General disclosures:
a. The aggregate gain or loss arising on initial recognition of biological assets and agricultural produce and
from the change in fair value less costs to sell of biological assets.
b. Description of each group of biological assets.
c. Description of the nature of activities involving each group of biological assets and physical quantities of
assets on hand at the end of the period and output of agricultural produce during the period.
d. Restrictions on titles to biological assets.
e. Commitments for the development or acquisition of biological assets.
f. Financial risk management strategies related to agricultural activity.
g. Reconciliation of changes in the carrying amount of biological assets, showing separately changes in fair
value less costs to sell, purchases, sales, harvesting, business combinations, and foreign exchange
differences.
 Encouraged disclosures:
The following disclosures are encouraged but not required:
a. Consumable and bearer biological assets.
b. Mature and immature biological assets.
Mature biological assets – are “those that have attained harvestable specifications (for consumable biological
assets) or are able to sustain regular harvests (for bearer biological assets)”.
c. Change in fair value less costs to sell during the period (1) due to price change and (2) due to physical
change.
This information is useful if the production cycle extends beyond one year. It is less useful if the production cycle is
less than a year (e.g., raising chickens or growing annual crops).
 Disclosures for biological assets measured at cost:
a. Description of the assets
b. An explanation of why fair value cannot be reliably measured
c. If possible, a range within which fair value is highly likely to lie
d. Depreciation method, useful lives or depreciation rates
e. Reconciliation of gross carrying amount and accumulated depreciation at the beginning and end of the
reporting period, showing information on depreciation, impairment loss and reversal of impairment loss.
 Disclosures for government grants:
a. Nature and extent of recognized government grants.
b. Unfulfilled conditions.
c. Significant decreases expected in the level of government grants.
globalization from below also involves less visible, more right-wing elements, such as the America
First Party and the Taliban.
The World Social Forum (WSF) is centered on addressing the lack of democracy in economic
and political affairs (Fisher and Ponniah, 2003). However, the diversity of elements involved in WSF
hinders the development of concrete political proposals. A significant influence un WSF has been that
of cyberactivism, which is based on the "cultural logic of networking" (Juris, 2005) and "virtual
movements," such as Global Huaren. This cyberpublic was formed as a protest against the violence,
discrimination, and hatred experienced by Chinese residents in Indonesia after the 1997 Asian
financial crisis, In 1998. worldwide rallies condemning the violence were made possible through the
Global Huaren which according to Ritzer (2015) "became an interesting global watchdog for Chinese
Interests" (p. 307).
Since there is no single globalization, the future is also multi-dimensional. Some foresee the
continuing expansion of globalization both In generals well as in more specific globalization. Others
have a far more pessimistic vision of "Mad Max”scenarios that could end the current era of
globalization (Turner, 2007).
In any case, given that there is no world government, the idea of global citizenship demands
the creation of rights and obligations. Moreover, fulfilling the promises of globalization and the solution
to the problems of the contemporary world does not lie on single entity or individual, but on citizens,
the community, and the different organizations in societies. The dynamics of globalization demands
the efforts of the whole array of Inter-governmental organizations such as the United Nations and the
World Bank; international NGOS like Greenpeace and Amnesty International; and the citizen
initiatives and community action groups that reach above the nation-state level like the World Social
Forum and Occupy Movement. Ultimately, reforms in global governance are required to allow world
citizens to take more part directly in all aspects of human life at the global level