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    Ias 41

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    Jozelle Grace Padel
    The document discusses IAS 41 Agriculture, which provides accounting requirements for biological assets and agricultural produce. Biological assets include living animals and plants, while agricultural produce refers to harvested crops. IAS 41 outlines measurement and accounting policies for biological assets and agricultural produce, including initial and subsequent measurement at fair value less costs to sell.

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    Ias 41

    Uploaded by

    Jozelle Grace Padel
    318 views27 pages
    The document discusses IAS 41 Agriculture, which provides accounting requirements for biological assets and agricultural produce. Biological assets include living animals and plants, while agricultural produce refers to harvested crops. IAS 41 outlines measurement and accounting policies for biological assets and agricultural produce, including initial and subsequent measurement at fair value less costs to sell.

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    IAS 41

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    The document discusses IAS 41 Agriculture, which provides accounting requirements for biological assets and agricultural produce. Biological assets include living animals and plants, while agricultural produce refers to harvested crops. IAS 41 outlines measurement and accounting policies for biological assets and agricultural produce, including initial and subsequent measurement at fair value less costs to sell.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    318 views27 pages

    Ias 41

    Uploaded by

    Jozelle Grace Padel
    The document discusses IAS 41 Agriculture, which provides accounting requirements for biological assets and agricultural produce. Biological assets include living animals and plants, while agricultural produce refers to harvested crops. IAS 41 outlines measurement and accounting policies for biological assets and agricultural produce, including initial and subsequent measurement at fair value less costs to sell.

    Copyright:

    © All Rights Reserved
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    IAS 41 : Agriculture

    Definitions:
    • Biological Assets : Living Animals and Living
    Plants
    • Agricultural Produce : Harvested product of an
    entity’s biological assets
    • Harvest : Detachment of produce from a
    biological asset or the cessation of a biological
    asset’s life processes.
    Features of agriculture
    • Capability of change
    • Management of change
    • Measurement of change
    IAS 41 shall apply to :
    • Biological Assets
    • Agricultural Produce at point of harvest
    • Government grant related to a biological asset
    IAS41 does not apply to:
    1.) Measurement of products after harvest or
    processing of agricultural produce

    I.E Processing of Milk to Cheese, Processing of


    Orange into Orange Juice

    Shall be treated as Inventory under IAS2


    IAS41 does not apply to:
    2.) Bearer Plants : Used solely to grow produce
    over several periods.

    Examples : Grape Vines, Rubber Trees, Oil Palms,


    Fruit Trees

    IAS 16 ( Property, Plant , Equipment shall be


    applied )
    The following are not bearer plants:

    • Plants cultivated to be harvested as


    agricultural produce ( Trees grown for use as
    lumber)
    • Annual Crops ( Wheat , Corn , Rice, Soybean )
    * Since they are planted and harvested every
    year.
    IAS41 does not apply to:
    3.) Animal-Related Recreational Activities

    Examples: Zoo Animals, Fishes in Ocean Park

    IAS 16 ( Property, Plant , Equipment shall be


    applied )
    IAS41 does not apply to:
    4.) Ocean Fishing and Deforestation

    ( Since their sources are unmanaged)


    Sample Problem:
    X owns an agricultural land. He planted the
    following
    A. ) Orange Tree
    B. ) Wheat

    He also purchased 10 cows.


    Question: How shall X treat the following?

    • Agricultural Land
    • Orange Tree
    • Wheat
    • Cows
    • Agricultural Land will be treated under IAS16,
    property, plant and equipment
    • Orange Tree is a bearer plant, thus will be
    treated under IAS16, property, plant and
    equipment
    • Wheat is not a bearer plant, It shall be treated
    using IAS41, agriculture
    • Cow is a bearer animal, It shall be treated under
    IAS41, agriculture
    How is a biological asset measured?

    • FAIR VALUE LESS COST OF DISPOSAL

    * Agricultural Produce shall be measured as Fair


    Value Less Cost of Disposal at the time of
    harvest
    Fair Value Gains/ Losses
    Fair Value Gains/ Losses shall be recognized in
    profit or loss

    Separating fair value changes from physical


    change and price change is encouraged but not
    required under IAS41
    Physical Change : Fair Value change due to
    growth or birth

    Price Change: Fair Value change due to change


    in market prices.
    Sample Problem:
    X purchased 1 cow which is 3 years old for
    P15,000 for the purpose of producing milk for
    the local community. On July 1 , the cow gave
    birth to 2 calves.
    The active market provided the fair value less
    cost of disposal of the biological assets as follows

    New-born calf on July 1 4,000


    New-born calf on December 31 5,000
    ½ year old calf on December 31 7,000
    3 years old cow on December 31 18,000
    4 years old cow on December 31 24,000
    Journal Entry
    To record acquisition for P15,000
    Biological Assets 15,000
    Cash 15,000

    To record giving birth of 2 calves with fair value


    of 4,000 each
    Biological Assets 8,000
    Gain from Change in fair value 8,000
    To record the change in fair value of the cows and
    calves on December 31

    Cow which is now 4 years old 24,000


    Calves that are now ½ years old 14,000
    (7,000X2)
    Total Fair Value – December 31 38,000
    Less: Carrying amount of biological 23,000
    assets (15,000+8,000)
    Changes in Fair Value – year end 15,000
    Total fair value changes for the year :
    8,000 (birth of calves) + 15, 000 = 23,000
    Instruction #2
    • Separate the change in fair value between the
    portion attributable to price change and the
    portion attributable to physical change.
    Cow

    Acquisition Fair Value of a 3 year Fair Value of a 4 year


    Cost old Cow, December 31 old Cow, December 31

    15,000 18,000 24,000


    PRICE CHANGE PHYSICAL CHANGE
    New-Born Calf

    Fair Value of Fair Value of a new-born Fair Value of a 1/2 year


    New-born Calf, July 1 old Calf, December 31 old Calf, December 31

    4,000 5,000 7,000


    PRICE CHANGE PHYSICAL CHANGE
    Change in fair value due to Physical Change

    4 years old cow on December 31 24,000


    Less: 3 years old cow on December 31 18,000
    Physical Change : 6,000

    ½ year old calf on December 31 7,000


    Less: Newborn calf on December 31 5,000
    Physical Change : 2,000
    • 2,000 X 2 calves = 4,000
    Physical Change :
    4 year old cow P6,000
    ½ year old calves 4,000
    At birth 4,000 X 2 8,000
    Total 18,000
    Change in fair value due to Price Change

    3 years old cow on December 31 18,000


    Less: Acquisition cost of Cow 15,000
    Price change 3,000

    Newborn calf on December 31 5,000


    Less: Newborn calf on July 1 4,000
    Price Change 1,000
    * 1,000 X 2 calves = P2,000
    Price Change
    4 year old cow P3,000
    ½ year old calves 2,000
    Total P 5,000

    Physical change P18,000


    Price change 5,000
    Total 23,000

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