IAS 41 Agriculture
Tax Guide: IAS 41 Agriculture
SCOPE
IAS 41 applies to all biological assets held by an entity except for bearer plants.
Bearer plants are fruit trees and the alike which will bear produce for more than one period. Bearer plants are accounted for under IAS 16 Property, Plant and Equipment. Produce grown on bearer plants is in the scope
The standard applies up to the point of harvest of a biological asset, at which point IAS 2 Inventories or another applicable standard will apply
Biological assets are separate to the land on which they are situated and the land is accounted for in under IAS 16.
MEASUREMENT
Biological assets should be recognised initially, at each subsequent reporting date and at the point of harvest at fair value less estimated costs to sell.
Gains and losses arising from re-measuring biological assets at fair value are recognised in profit and loss in the periods in which they arise.
INABILITY TO MEASURE FAIR VALUE
Sometime cost can approximate fair value, especially if little biological transformation has occurred since inception and the biological transfer is expected to occur slowly over a long term.
There is a rebuttable assumption that the fair value of the biological asset can be reliably determined.
This can be rebutted on initial recognition if there is not quoted market price and which alternative fair value measurements are considered unreliable. In such case the biological asset will be recognised at cost less accumulated depreciation and impairment losses.
Once the fair value of the biological asset becomes reliably measurable, it should commence to be measured at fair value less estimated costs to sell.
GOVERNMENT GRANTS
IAS 41 provides specific guidance for government grants relating to biological assets:
- Unconditional government grants relating to biological assets are measured at fair value less estimated costs to sell and shall be recognised in profit and loss when the government grant is receivable
- Conditional government grants relating to biological assets, including where a government grant requires an entity not to engage in specified agricultural activities shall be recognised in profit and loss only when the conditions attached to the grant are satisfied
DISCLOSURES
Disclosures are required around the nature of biological assets and the terms and conditions of any related government grants. A reconciliation of the movement in the movement of the carrying amount of the biological assets for the period. Additional information is also required where a biological asset is not measured at fair value.
CONTACTS
| BOAZ DAHARI Moore Israel [email protected] | KRISTEN HAINES Moore Australia [email protected] | TAN KEI HUI Moore Malaysia [email protected] |
| CHRISOF STEUBE Moore Singapore [email protected] | NEES DE VOS Moore DRV [email protected] | TESSA PARK Moore Kingston Smith [email protected] |
| EMILY KY CHAN Moore CPA Limited [email protected] | PAUL CALLAGHAN Moore Oman [email protected] | THEODOSIOS DELYANNIS Moore Greece [email protected] |
| IRINA HUGHES Johnston Carmichael [email protected] | SAHEEL ABDULHAMID Moore JVB LLP [email protected] |
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