→ Biological assets whose fair value cannot be reliably determined on

Biological asset: additional topic initial recognition are initially measured at cost and subsequently
measured at cost less accumulated depreciation and accumulated
impairment loss.
Pas 41 - Agriculture → Agricultural produce is, in all cases, initially measured at fair value
less cost to sell at the point of harvest.
agriculture means farming or the process of producing crops and raising Inventory xxx
livestock. Gain due to harvest xxx
Pas 41 applied to the following when they relate to agriculture activity: → Formulas (biological asset)
a. biological asset (living plants and animals), except for bearer plants Subsequent Fair value
(under pas 16: property, plant, and equipment) -cost to sell (exclude interest expense, income tax,
b. Agricultural produce at the point of harvest transportation, advertising cost)
c. Unconditional government grants related to biological asset.
cannot be reliably measured at fair value
Agricultural Activity is the management by an entity of the biological Cost
transformation and harvest of biological assets for sale or for conversion - accumulated depreciation
into agricultural produce. - accumulated impairment loss
Common Features of Agricultural Activities: Accounting entries:
◦ Capability to change living animals and plants are capable of biological Fv less cost to sell of biological asset at Dec. 31 2018 3 500 000
transformation (growth, procreation and degeneration) Biological asset purchased during 2019
◦ Management of change management facilitates biological Purchase price: 4 000 000
transformation by enhancing, or at least stabilizing, conditions Fv less cost to sell 3 900 000
necessary for the process to take place. Income arising from change in fair value less cost to sell during 2019 due to
◦ Measurement of change the change in quality or quantity brought Price change 1 200 000
about by biological transformation or harvest is measured and Physical change 2 500 000
monitored as a routine management function Sale of biological asset during 2019 4 200 000
Biological asset living plant or animal. For example sheep, trees in a
plantation forest, plants, dairy cattle, pigs, bushes, vines, and fruit trees. Upon purchase
◦ Consumable biological asset those that are to be harvested as Biological asset 3 900 000
agricultural produce (for example; rice crops and corn crops). Expense - initial recognition of biological assets 100 000
Cash 4 000 000
◦ Bearer biological asset those that are held to bear produce. Only the
produce is harvested while the bearer biological asset remains. (for
example: cow’s milk is classified as agricultural produce, while cow is Increase in fvcts during the period (birth of biological assets and change in fv
classified as bearer) immediately prior for sale)
Biological asset 3 700 000
Animals, whether consumable or bearer, are classified as biological Income - change in fv less cost to sell due to price change 1 200 000
assets if they relate to agricultural activity Income - change in fv less cost to sell due to physical change 2 500 000
Plants, are classified as biological assets only If they are consumable
(fruits, vegetable, and timber). Bearer plants are classified as PPE Sale of biological asset - no gain or loss
(for example: mango tree that under the ias 16 in which is classified Cash 4 200 000
as ppe) Biological asset 4 200 00
Par 16
a. Is used in the production or supply of agricultural produce
b. Is expected to bear produce for more than one period.
c. Has remote likelihood of being sold, as agricultural produce, except
for incidental scrap sale

Agricultural produce is the harvested product of the entity’s biological

asset. For example; mil from cattle, wool from sheep, and logs trees
→ Harvested is the detachment of produce of the entity’s asset or the
cessation of a biological asset’s life processes.
→ Agricultural produce refers to those that are in natural state and
are not yet processed.
→ Those that are already subjected to processing are treated as
inventories (for example: milk (agricultural produce) to cheese
(inventory) ias 2).

Measurement of Biological Asset & Agricultural Produce

→ Biological Assets are initially and subsequently at fair value less cost
to sell.
◦ 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 (buyer and seller) at the measurement
date. (normal selling price - the price you would get if you
sold something or the price you would pay if you bought
something)
It is not adjusted by a contract (with contract price) to sell at
future date, rather, it is based on the present condition of the
biological asset at the measurement date
◦ Cost to sell are the incremental costs directly attributable to
the disposal of an asset, excluding finance costs (or interest
expense) and income taxes. Cost to sell include the following:
a. Commissions to broker
b. Levies by regulatory agencies and commodity
exchanges
c. transfer taxes and duties
◦ Costs to sell do not include transport costs, advertising costs,
income taxes, and interest expense.
→ The gain or loss arising from initial measurement and subsequent
changes in fair value less cost to sell are recognized in profit or loss.