Biological Assets v3

AGRICULTURE
(IAS 41)
AGRICULTURE
1
Definitions of Key Terms (in
accordance with IAS 41)
 Agricultural activity is the management by an enterprise
of the biological transformation of biological assets for
sale, into agricultural produce or into additional biological
assets.
 Biological assets. Living plants and animals.
 Agricultural produce. The product of the entity’s
biological assets, for example, milk and coffee beans.
 Biological transformation. Relates to the processes of
growth, degeneration, and production that can cause
changes of quantitative or qualitative nature in a biological
asset.
Definitions Con’td….
 Biological transformation leads to various different
outcomes.
 Asset changes:
 Growth: increase in quantity and/or quality
 Degeneration: decrease in quantity and/or quality
 Creation of new assets:

 Production: producing separable non-living products
 Procreation: producing separable living animals

Examples of Biological Assets
Products that are the
result of processing
Biological Asset Agricultural Produce after harvest
Sheep Wool Yarn, carpet
Trees in a plantation
forest Logs Lumber
Plants Cotton, harvested cane Thread, clothing, sugar
Dairy cattle Milk Cheese
Pigs Carcass Sausages, cured hams
Bushes Leaf Tea, cured tobacco
Vines Grapes Wine
Fruit trees Picked fruit Processed fruit
4. Types of Biological Assets
Produce
5
Types of Biological Assets
(cont’d)
Bearer biological assets:
Bearer plants are defined in IAS 41as a plant
that meets all the following criteria:
 It is used in the production or supply of agricultural
produce
 It is expected to bear produce for more than one
period
 It is not intended to be sold as a living plant or
harvested as agricultural produce, except for
incidental scrap sales (i.e. for firewood at the end of
the plants productive life). 6
Types of Biological Assets
(cont’d)
 Consumable biological assets:
 Biological assets which do not meet all
of the above requirements.
 Are those assets that are to be
harvested as agricultural produce or sold
as biological assets
 All animals
7
Recognition
An entity should recognize a biological asset or

agricultural produce when :
(a) the enterprise controls the asset as a result of past
events;
(b) it is probable that the future economic benefits
will flow to the enterprise; and
(c) the fair value or cost can be measured reliably.

7. Measurement
• Any biological asset should be measured initially and
at each balance sheet date, at its fair value less
estimated point-of-sale costs.
• The only exception to this is where the fair value
cannot be measured reliably.
• Agricultural produce should be measured at fair value
less estimated point-of-sale costs at the point of
harvest.
• According to IAS 41, agricultural produce can always
be measured reliably.
• Point-of-sale costs include brokers’ and dealers’
commissions, any levies by regulatory authorities and
commodity exchanges, and any transfer taxes and
duties.
• They exclude transport and other costs necessary to
get the assets to a market.
7. Recognition & Measurement:
Biological Assets
Consumable Biological Bearer Biological assets
Assets
At initial • Measured together with any • Measured separately from any
recognition agricultural produce attached agricultural produce attached
(i.e., one unit of account) (i.e., two units of account)
• Measured at fair value less • Measured at cost accumulated
costs to sell until maturity
Subsequent • Measured together with the Measured at:

measurement agricultural produce until a)Cost, less any subsequent
requirements the point of harvest (i.e., accumulated depreciation and
one unit of account until the impairment.
point of harvest) b) Fair value at each revaluation
• Measured at the end of date, less any subsequent
each reporting period at fair accumulated depreciation and
value less costs to sell, with impairment.
changes recognised in
profit or loss
7. Recognition & Measurement:
Agricultural Produce
Consumable Bearer Biological
Biological Assets assets
At the end of •Measured together Measured separately
each with the bearer plant from the bearer plant at
reporting •Measured at fair fair value less costs to
period prior value less costs to sell
to harvest sell, with changes
recognised in profit or
loss as the produce
grows
At the point Measured separately Measured separately

of harvest from the bearer plant from the bearer plant at
at fair value less costs fair value less costs to
8. Presentation
 In the statement of financial position biological assets

should be classified as a separate class of assets falling
under neither current nor non-current classifications.
 This reflects the view of such assets as having an
unlimited life on a collective basis; it is the total exposure
of the entity to this type of asset that is important.
 Biological assets should also be sub-classified (either on
the face of the statement of financial position or as a note
to the accounts).
 Class of animal or plant
 Nature of activities (consumable or bearer)
 Maturity or immaturity for intended purpose
9. Disclosures
 An entity shall disclose the aggregate gain or loss that

arises on the initial recognition of biological assets and
agricultural produce and from the change in value less
estimated point-of sale costs of the biological assets.
 A description of each group of biological assets is also
required.
 The methods and assumptions applied in determining
fair value should also be disclosed.
Disclosure…
 The fair value less estimated point-of-sale costs of
agricultural produce harvested during the period shall be
disclosed at the point of harvest
 The existence and carrying amounts of biological assets
whose title is restricted and any biological assets placed as
security should be disclosed.
 The amount of any commitments for the development or
acquisition of biological assets and management’s financial
risk strategies should also be disclosed.
 A reconciliation of the changes in the carrying amount of
biological assets showing separately changes in value,
purchases, sales, harvesting, business combinations, and
exchange differences should be disclosed.

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AGRICULTURE

 Degeneration: decrease in quantity and/or quality

 Creation of new assets:

 Procreation: producing separable living animals

An entity should recognize a biological asset or

Subsequent • Measured together with the Measured at:

At the point Measured separately Measured separately

 In the statement of financial position biological assets

 An entity shall disclose the aggregate gain or loss that

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