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Objective
The objective of this Standard is to prescribe the accounting treatment and
disclosures related to agricultural activity.
Scope:
1. This Standard shall be applied to account for the following when they relate to
agricultural activity:
(a) Biological assets;
(b) Agricultural produce at the point of harvest; and
(c) Government grants covered by paragraphs 3435.
2. This Standard does not apply to:
(a) land related to agricultural activity (see IAS 16 Property, Plant and Equipment
and IAS 40
Investment Property); and
(b) intangible assets related to agricultural activity (see IAS 38 Intangible
Assets).
3 This Standard is applied to agricultural produce, which is the harvested
product of the entitys biological assets, only at the point of harvest. Thereafter,
IAS 2 Inventories or another applicable Standard is applied. Accordingly, this
Standard does not deal with the processing of agricultural produce after harvest.
Examples:
Biological Assets
Agriculture Produce
Plants
Cattle
Vines
Sheep
Coffee Beans
Milk
Grapes
Wool
Recognition :
An entity shall recognise a biological asset or agricultural produce when, and
only when:
(a) The entity controls the asset as a result of past events;
(b) It is probable that future economic benefits associated with the asset will flow
to the entity; and
(c) The fair value or cost of the asset can be measured reliably.
Measurement:
1. All biological assets must be measured initially and at each subsequent
reporting date at their fair value less costs to sell, except in cases where
the fair value cannot be measured reliably.
2. Agricultural produce that is harvested from the entitys biological asset
must be measured at its fair value less costs to sell at the point of harvest.
Subsequent to the harvest, the produce is measured applying the
principles of IAS 2, Inventories, or any another applicable standard.
2. Similarly, any gain or loss that arises on the initial recognition of agricultural
produce at fair value less costs to sell should be included in profit or loss for the
period to which
it relates. An example of this is the gain or loss on initial recognition of
agricultural produce,
since the crop when harvested can have more value than the crop that has not
been harvested. 3. All costs related to the biological assets, other than those
that related to its purchase, should be measured at fair value and recognized in
profit or loss when incurred.
IAS 41 presumes that the fair value of a biological asset can be measured
reliably. However, it is possible that there is no quoted market price in an active
market when the biological asset is first recognized and no other valuation
methods are appropriate. In such cases, the asset is measured at cost less
accumulated depreciation and any impairment losses. When circumstances do
change and fair value becomes reliably measurable, then the entity must
measure the asset at fair value less costs to sell.
Government grants
1. An unconditional government grant related to a biological asset measured
at its fair value less costs to sell shall be recognised in profit or loss when,
and only when, the government grant becomes receivable.
2. If a government grant related to a biological asset measured at its fair
value less costs to sell is conditional, including when a government grant
requires an entity not to engage in specified agricultural activity, an entity
shall recognise the government grant in profit or loss when, and only
when, the conditions attaching to the government grant are met.
3. Terms and conditions of government grants vary. For example, a grant may
require an entity to farm in a particular location for five years and require the
entity to return all of the grant if it farms for a period shorter than five years. In
this case, the grant is not recognised in profit or loss until the five years have
passed. However, if the terms of the grant allow part of it to be retained
according to the time that has elapsed, the entity recognises that part in profit or
loss as time passes.
4. If a government grant relates to a biological asset measured at its cost less
any accumulated depreciation and any accumulated impairment losses (see
paragraph 30), IAS 20 Accounting for Government Grants and Disclosure of
Government Assistance is applied.
5. This Standard requires a different treatment from IAS 20, if a government
grant relates to a biological asset measured at its fair value less costs to sell or a
government grant requires an entity not to engage in specified agricultural
activity. IAS 20 is applied only to a government grant related to a biological asset
measured at its cost less any accumulated depreciation and any accumulated
impairment losses.
Disclosures:
The following are disclosures prescribed by IAS 41:
The aggregate gain or loss that arises on the initial recognition of biological
assets and
agricultural produce and from the change in value less costs to sell of the
biological
assets;
Description of each group of biological assets. If this information is not
disclosed in the
financial statements, the nature of its activities and nonfinancial measures or
estimates of
the physical quantity of each group of the entitys biological assets at period end
and that
of the output for agricultural produce during the period should be disclosed;
Methods and assumptions applied in determining fair value of each group of
agricultural
produce at the point of harvest and of each group of biological assets;
Fair value less costs to sell of agricultural produce harvested during the period
shall be
disclosed at the point of harvest;
Existence and carrying amounts of biological assets whose title is restricted
and that of
any biological assets that are placed as security for liabilities;
Amount of any commitments for the development or acquisition of biological
assets;
Financial risk management strategies;
Reconciliation of the changes in the carrying amount of biological assets that
discloses
Gain or loss arising from changes in fair value less costs to sell;
Increase on purchases;
Decrease on sales and biological assets classified as held for sale in
accordance with IFRS 5;
Decrease due to harvest;
Increase resulting from business combinations; and
Net exchange differences arising on translation of financial statements into
different presentation and on translation of a foreign operation into the
presentation currency of the reporting entity.
When biological assets that are stated at cost less accumulated depreciation and
impairment losses are disposed of, the entity shall disclose any gain or loss on
disposal and provide reconciliation as above, and provide the details of
impairment losses and depreciation. When the fair value of biological assets
cannot be measured, additional disclosure should be made relating to the
description of the asset, an explanation of why fair value cannot be measured
reliably, the range, if possible, of estimates within which the fair value is likely to
fall, the depreciation method used, useful lives or depreciation rates used and
gross carrying amount, and accumulated depreciation at the beginning and end
of the period. When the fair value of the biological assets that were previously
measured at cost less accumulated depreciation and impairment losses is
now measurable, additional disclosures regarding description of the biological
assets, explanation as to why fair value is now reliably measurable, and the
effect of the change must be disclosed. Regarding government grants,
disclosures should be made as to the nature and extent of the grants, any
conditions that have not been fulfilled, and any significant decreases in the
expected level of the grants.