Contents
INTERNATIONAL ACCOUNTING STANDARD 41
AGRICULTURE
OBJECTIVE
SCOPE
1
DEFINITIONS
5
Agriculture‑related definitions
5
General definitions
8
RECOGNITION AND MEASUREMENT
10
Gains and losses
26
Inability to measure fair value reliably
30
GOVERNMENT GRANTS
34
DISCLOSURE
40
General
40
Additional disclosures for biological assets where fair value cannot be measured reliably
54
Government grants
57
EFFECTIVE DATE AND TRANSITION
58
APPROVAL BY THE BOARD OF
AGRICULTURE: BEARER PLANTS
(AMENDMENTS TO IAS 16 AND IAS 41) ISSUED IN JUNE 2014
FOR THE ACCOMPANYING GUIDANCE LISTED BELOW, SEE PART B OF THIS EDITION
ILLUSTRATIVE EXAMPLES
FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION
BASIS FOR CONCLUSIONS
BASIS FOR IASC’S CONCLUSIONS
DISSENTING OPINIONS
International Accounting Standard 41
Agriculture
(IAS 41) is set out in
paragraphs 1–66
. All the paragraphs have equal authority but retain the IASC format of the Standard when it was adopted by the IASB. IAS 41 should be read in the context of its
objective
and the
Basis for Conclusions
, the
Preface to IFRS Accounting Standards
and the
Conceptual Framework for Financial Reporting
.
Basis of Preparation of Financial Statements
provides a basis for selecting and applying accounting policies in the absence of explicit guidance.
[
Refer:
IAS 8 paragraphs 10–12
]
International Accounting Standard 41
Agriculture
Objective
The objective of this Standard is to prescribe the accounting treatment and disclosures related to
agricultural activity
.
Scope
[
Refer:
Basis for Conclusions paragraphs B8–B12
]
1
This Standard shall be applied to account for the following when they relate to
agricultural activity
:
[
Refer:
paragraph 5 (definition of agricultural activity)
]
(a)
biological assets
,
[
Refer:
paragraph 5 (definition of biological asset)
]
except for bearer plants;
[
Refer:
paragraph 5 (definition of bearer plant)
]
(b)
agricultural produce
[
Refer:
paragraph 5 (definition of agricultural produce)
]
at the point of
harvest
;
[
Refer:
paragraph 5 (definition of harvest)
]
and
(c)
government grants
[
Refer:
paragraph 8 (definition of government grants)
]
covered by
paragraphs 34 and 35
.
2
This Standard does not apply to:
(a)
land related to
agricultural activity
(see
Property, Plant and Equipment
and
Investment Property
).
[
Refer:
Basis for Conclusions paragraphs B55–B57
]
(b)
bearer plants related to agricultural activity (see
).
[
Refer:
IAS 16 Basis for Conclusions paragraphs BC63–BC68
and
BC94
]
However, this Standard applies to the produce on those bearer plants.
[
Refer:
IAS 16 Basis for Conclusions paragraphs BC73–BC79
]
(c)
government grants related to bearer plants (see
Accounting for Government Grants and Disclosure of Government Assistance
).
(d)
intangible assets related to
agricultural activity
(see
Intangible Assets
).
[
Refer:
Basis for Conclusions paragraphs B58–B60
]
(e)
right-of-use assets arising from a lease of land related to agricultural activity (see
Leases
).
[
Refer:
IFRS 16 paragraph 3
]
3
This Standard is applied to
agricultural produce
, which is the harvested produce of the entity’s
biological assets
, at the point of
harvest.
[
Refer:
Basis for Conclusions paragraphs B41–B46
]
Thereafter,
Inventories
or another applicable Standard is applied. Accordingly, this Standard does not deal with the processing of agricultural produce after harvest; for example, the processing of grapes into wine by a vintner who has grown the grapes. While such processing may be a logical and natural extension of
agricultural activity
, and the events taking place may bear some similarity to
biological transformation
, such processing is not included within the definition of agricultural activity in this Standard.
4
The table below provides examples of
biological assets
,
agricultural produce
, and products that are the result of processing after
harvest
:
Biological assets
Agricultural produce
Products that are the result of processing after harvest
Sheep
Wool
Yarn, carpet
Trees in a timber plantation
Felled trees
Logs, lumber
Dairy cattle
Milk
Cheese
Pigs
Carcass
Sausages, cured hams
Cotton plants
Harvested cotton
Thread, clothing
Sugarcane
Harvested cane
Sugar
Tobacco plants
Picked leaves
Cured tobacco
Tea bushes
Picked leaves
Tea
Grape vines
Picked grapes
Wine
Fruit trees
Picked fruit
Processed fruit
Oil palms
Picked fruit
Palm oil
Rubber trees
Harvested latex
Rubber products
Some plants, for example, tea bushes, grape vines, oil palms and rubber trees, usually meet the definition of a bearer plant and are within the scope of
. However, the produce growing on bearer plants, for example, tea leaves, grapes, oil palm fruit and latex, is within the scope of IAS 41.
Definitions
Agriculture‑related definitions
5
The following terms are used in this Standard with the meanings specified:
Agricultural activity
is the management by an entity of the
biological transformation
and
harvest
of
biological assets
for sale or for conversion into
agricultural produce
or into additional
biological assets
.
[
Refer:
Basis for Conclusions paragraph BC9
]
Agricultural produce
is the
harvested
produce of the entity’s
biological assets
.
A
bearer plant
is a living plant that:
(a)
is used in the production or supply of agricultural produce;
(b)
is expected to bear produce for more than one period; and
(c)
has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.
[
Refer:
IAS 16 Basis for Conclusions paragraphs BC48–BC62
]
A
biological asset
is a living animal or plant.
Biological transformation
comprises the processes of growth, degeneration, production, and procreation that cause qualitative or quantitative changes in a
biological asset
.
Costs to sell
are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income taxes.
[
Refer:
Basis for Conclusions paragraphs BC3 and BC4
]
A
group of biological assets
is an aggregation of similar living animals or plants.
Harvest
is the detachment of produce from a
biological asset
or the cessation of a biological asset’s life processes.
5A
The following are not bearer plants:
(a)
plants cultivated to be harvested as agricultural produce (for example, trees grown for use as lumber);
(b)
plants cultivated to produce agricultural produce when there is more than a remote likelihood that the entity will also harvest and sell the plant as agricultural produce, other than as incidental scrap sales (for example, trees that are cultivated both for their fruit and their lumber); and
(c)
annual crops (for example, maize and wheat).
5B
When bearer plants are no longer used to bear produce they might be cut down and sold as scrap, for example, for use as firewood. Such incidental scrap sales would not prevent the plant from satisfying the definition of a bearer plant.
5C
Produce growing on bearer plants is a biological asset.
6
Agricultural activity
covers a diverse range of activities; for example, raising livestock, forestry, annual or perennial cropping, cultivating orchards and plantations, floriculture and aquaculture (including fish farming). Certain common features exist within this diversity:
(a)
Capability to change
. Living animals and plants are capable of
biological transformation
;
(b)
Management of change
. Management facilitates biological transformation by enhancing, or at least stabilising, conditions necessary for the process to take place (for example, nutrient levels, moisture, temperature, fertility, and light). Such management distinguishes agricultural activity from other activities. For example,
harvesting
from unmanaged sources (such as ocean fishing and deforestation) is not agricultural activity; and
(c)
Measurement of change
. The change in quality (for example, genetic merit, density, ripeness, fat cover, protein content, and fibre strength) or quantity (for example, progeny, weight, cubic metres, fibre length or diameter, and number of buds) brought about by biological transformation or
harvest
is measured and monitored as a routine management function.
[
Refer:
Basis for Conclusions paragraph BC9
]
7
Biological transformation
results in the following types of outcomes:
(a)
asset changes through (i) growth (an increase in quantity or improvement in quality of an animal or plant), (ii) degeneration (a decrease in the quantity or deterioration in quality of an animal or plant), or (iii) procreation (creation of additional living animals or plants); or
(b)
production of
agricultural produce
such as latex, tea leaf, wool, and milk.
General definitions
8
The following terms are used in this Standard with the meanings specified:
Carrying amount
is the amount at which an asset is recognised in the statement of financial position.
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 at the measurement date. (See IFRS 13
Fair Value Measurement
.
[
Refer:
IFRS 13 paragraphs 9
and
Appendix A
]
)
Government grants
are as defined in
.
9
[Deleted]
Recognition and measurement
10
An entity shall recognise a
biological asset
or
agricultural produce
when, and only when:
(a)
the entity controls
[
Refer:
paragraph 11
]
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.
11
In
agricultural activity
, control may be evidenced by, for example, legal ownership of cattle and the branding or otherwise marking of the cattle on acquisition, birth, or weaning. The future benefits are normally assessed by measuring the significant physical attributes.
12
A
biological asset
shall be measured on initial recognition and at the end of each reporting period
[
Refer:
Basis for Conclusions paragraph B32
]
at its
fair value
[
Refer:
Basis for Conclusions paragraphs B13–B21
]
less
costs to sell
,
E1
[
Refer:
Basis for Conclusions paragraphs B22–B26
]
except for the case described in
paragraph 30
where the fair value cannot be measured reliably.
E1
[IFRIC®
Update
, September 2019, Agenda Decision, ‘
Agriculture
—Subsequent Expenditure on Biological Assets’
The Committee received a request about the accounting for costs related to the biological transformation (subsequent expenditure) of biological assets measured at fair value less costs to sell applying IAS 41. The request asked whether an entity capitalises subsequent expenditure (ie adds it to the carrying amount of the asset) or, instead, recognises subsequent expenditure as an expense when incurred.
IAS 41 does not specify the accounting for subsequent expenditure for biological assets measured at fair value less costs to sell. Paragraph B62 of the Basis for Conclusions on IAS 41 explains that ‘…the [IASC] Board decided not to explicitly prescribe the accounting for subsequent expenditure related to biological assets in the Standard, because it believes to do so is unnecessary with a fair value measurement approach’.
[Accordingly, the Committee concluded that, applying IAS 41, an entity either capitalises subsequent expenditure or recognises it as an expense when incurred. The Committee observed that capitalising subsequent expenditure or recognising it as an expense has no effect on the fair value measurement of biological assets nor does it have any effect on profit or loss; however, it affects the presentation of amounts in the statement of profit or loss. In assessing how to present such subsequent expenditure in the statement of profit or loss, an entity would apply the requirements in paragraphs 81–105 of
Presentation of Financial Statements
. In particular, the Committee observed that the entity would:
a.
applying paragraph 85, ‘present additional line items (including by disaggregating the line items listed in paragraph 82), headings and subtotals in the statement(s) presenting profit or loss and other comprehensive income when such presentation is relevant to an understanding of the entity’s financial performance’; and
b.
applying paragraph 99, present in the statement(s) presenting profit or loss and other comprehensive income or in the notes an analysis of expenses recognised in profit or loss using a classification based on either their nature or their function within the entity, whichever provides information that is reliable and more relevant.] [The requirements in IAS 1 referred to in these paragraphs are not all brought forward unchanged to IFRS 18
Presentation and Disclosure in Financial Statements
. The Committee’s conclusion regarding the application of the requirements in IAS 1 might not apply to the requirements in IFRS 18.]
Applying paragraph 13 of
Accounting Policies, Changes in Accounting Estimates and Errors
[now
Basis of Preparation of Financial Statements
], an entity would apply its accounting policy for subsequent expenditure consistently to each group of biological assets. An entity would also disclose the selected accounting policy applying
paragraphs 117–124
of
[now
paragraphs 27A–27I
of
] if that disclosure would assist users of financial statements in understanding how those transactions are reflected in reported financial performance.
In the light of its analysis, the Committee considered whether to add a project to its standard-setting agenda on the accounting for subsequent expenditure on biological assets. The Committee has not obtained evidence to suggest that standard-setting on this matter at this time would result in an improvement to financial reporting that would be sufficient to outweigh the costs. The Committee therefore decided not to add the matter to its standard-setting agenda.]
13
Agricultural produce
harvested from an entity’s
biological assets
shall be measured at its
fair value
less
costs to sell
[
Refer:
Basis for Conclusions paragraphs B22–B26
]
at the point of
harvest
. Such measurement is the cost at that date when applying
Inventories
or another applicable Standard.
[
Refer:
Basis for Conclusions paragraphs B41–B46
]
14
[Deleted]
15
The
fair value
measurement of a
biological asset
or
agricultural produce
may be facilitated by grouping biological assets or agricultural produce according to significant attributes; for example, by age or quality. An entity selects the attributes corresponding to the attributes used in the market as a basis for pricing.
16
Entities often enter into contracts to sell their
biological assets
or
agricultural produce
at a future date. Contract prices are not necessarily relevant in measuring
fair value
, because fair value reflects the current market conditions in which market participant
[
Refer:
IFRS 13 Appendix A (definition of market participants)
]
buyers and sellers would enter into a transaction. As a result, the fair value of a biological asset or agricultural produce is not adjusted because of the existence of a contract. In some cases, a contract for the sale of a biological asset or agricultural produce may be an onerous contract, as defined in
Provisions, Contingent Liabilities and Contingent Assets
.
applies to onerous contracts.
[
Refer:
Basis for Conclusions paragraphs B47–B54
and
IAS 37 paragraphs 66–69
]
17–21
[Deleted]
22
An entity does not include any cash flows for financing the assets or re‑establishing
biological assets
after
harvest
(for example, the cost of replanting trees in a plantation forest after harvest).
[
Refer:
Basis for Conclusions paragraphs BC11–BC12
]
23
[Deleted]
24
Cost may sometimes approximate
fair value
, particularly when:
(a)
little
biological transformation
has taken place since initial cost incurrence (for example, for seedlings planted immediately prior to the end of a reporting period or newly acquired livestock); or
(b)
the impact of the
biological transformation
on price is not expected to be material (for example, for the initial growth in a 30‑year pine plantation production cycle).
25
Biological assets
are often physically attached to land (for example, trees in a plantation forest). There may be no separate market for biological assets that are attached to the land but an
active market
may exist for the combined assets, that is, the biological assets, raw land, and land improvements, as a package. An entity may use information regarding the combined assets to measure the
fair value
of the biological assets. For example, the fair value of raw land and land improvements may be deducted from the fair value of the combined assets to arrive at the fair value of biological assets.
E2
E2
[IFRIC®
Update
, March 2013, Agenda Decision, ‘
Agriculture
and
Fair Value Measurement
—Valuation of biological assets using a residual method’
The Interpretations Committee received a request seeking clarification on paragraph 25 of IAS 41. This paragraph refers to the use of a residual method as an example of a possible valuation technique to measure the fair value of biological assets that are physically attached to land, if the biological assets have no separate market but an active market exists for the combined assets.
The submitter’s concern is that using the fair value of the land (ie based on its highest and best use as required by IFRS 13) in applying the residual method might result in a minimal or nil fair value for the biological assets when the highest and best use of the land is different from its current use.
The Interpretations Committee observed that, in the development of IFRS 13, the IASB considered the situation where the highest and best use of an asset in a group of assets is different from its current use. The Interpretations Committee noted, however, that IFRS 13 does not explicitly address the accounting implications if those circumstances arise and the fair value measurement of the asset based on its highest and best use assumes that other assets in the group need to be converted or destroyed.
The Interpretations Committee also noted that this issue might not only affect the accounting for assets within the scope of IAS 41 but it could also affect the accounting for assets in the scope of other Standards.
In the light of the analysis above, the Interpretations Committee observed that this issue is too broad for it to address and, accordingly, the Interpretations Committee decided not to take this issue onto its agenda. The Interpretations Committee directed the staff to ask the IASB to provide clarification of the accounting requirements for the issues considered by the Interpretations Committee.]
Gains and losses
26
A gain or loss arising on initial recognition
[
Refer:
paragraph 10
]
of a
biological asset
at
fair value
less
costs to sell
and from a change in fair value less costs to sell of a biological asset shall be included in profit or loss for the period in which it arises.
[
Refer:
Basis for Conclusions paragraphs B38–B40
]
27
A loss may arise on initial recognition of a
biological asset
, because costs to sell are deducted in determining
fair value
less
costs to sell
of a biological asset. A gain may arise on initial recognition of a biological asset, such as when a calf is born.
28
A gain or loss arising on initial recognition
[
Refer:
paragraph 10
]
of
agricultural produce
at
fair value
less
costs to sell
shall be included in profit or loss for the period in which it arises.
29
A gain or loss may arise on initial recognition of
agricultural produce
as a result of
harvesting
.
Inability to measure fair value reliably
[
Refer:
Basis for Conclusions paragraphs B34–B37
]
30
There is a presumption that
fair value
can be measured reliably for a
biological asset
. However, that presumption can be rebutted only on initial recognition for a biological asset for which quoted market prices
[
Refer:
IFRS 13 paragraphs 76
and
82
]
are not available and for which alternative fair value measurements
[
Refer:
IFRS 13 paragraph 87
]
are determined to be clearly unreliable.
E3
In such a case, that biological asset shall be measured at its cost less any accumulated depreciation and any accumulated impairment losses. Once the fair value of such a biological asset becomes reliably measurable, an entity shall measure it at its fair value less
costs to sell
. Once a non‑current
[
Refer:
paragraphs 96–100
]
biological asset meets the criteria to be classified as held for sale (or is included in a disposal group that is classified as held for sale)
[
Refer:
IFRS 5 paragraphs 6–14
]
in accordance with
Non‑current Assets Held for Sale and Discontinued Operations
, it is presumed that fair value can be measured reliably.
E3
[IFRIC®
Update
, June 2017, Agenda Decision, ‘IAS 41
Agriculture
—Biological assets growing on bearer plants’
The Committee received a request about the fair value measurement of produce growing on bearer plants. More specifically, the request asked whether the Committee considers fruit growing on oil palms to be an example of a biological asset for which an entity might rebut the fair value presumption applying paragraph 30 of IAS 41.
The Committee observed that:
a.
paragraph 5C of IAS 41 says that produce growing on bearer plants is a biological asset. Accordingly, an entity accounts for fruit growing on oil palms applying IAS 41.
b.
the recognition requirements in paragraph 10 of IAS 41 specify when an entity recognises the fruit growing on oil palms separately from the oil palms themselves. The entity accounts for the oil palms applying IAS 16
Property, Plant and Equipment
. An entity recognises a biological asset when the entity controls the asset as a result of past events, it is probable that future economic benefits associated with the asset will flow to the entity and the fair value or cost of the asset can be measured reliably.
c.
applying paragraph 12 of IAS 41, an entity measures a biological asset on initial recognition and at the end of each reporting period at its fair value less costs to sell, except as described in paragraph 30 of IAS 41.
d.
paragraph 30 of IAS 41 contains a presumption that fair value can be measured reliably for a biological asset. However, that presumption can be rebutted only on initial recognition for a biological asset for which quoted market prices are not available and for which alternative fair value measurements are determined to be clearly unreliable. Paragraph 30 of IAS 41 says that once the fair value of such a biological asset becomes reliably measurable, an entity measures it at its fair value less costs to sell.
The Committee concluded that the reference to ‘clearly unreliable’ in paragraph 30 of IAS 41 indicates that, to rebut the presumption, an entity must demonstrate that any fair value measurement is clearly unreliable. Paragraph BC4C of IAS 41 suggests that, when developing the amendments to IAS 41 on bearer plants, the Board’s expectation was that fair value measurements of produce growing on bearer plants might be clearly unreliable when an entity encounters significant practical difficulties. However, the Committee observed that the converse is not necessarily true—ie if an entity encounters significant practical difficulties, this does not necessarily mean that any fair value measurement of produce is clearly unreliable. In paragraph BC4C, the Board observed that in this situation, an entity should consider whether the measurement is clearly unreliable.
The Committee also observed that the submission appears to ask whether possible differences in supportable assumptions (which might result in significantly different valuations) constitute ‘significant practical difficulties’ as referred to in paragraph BC4C of IAS 41. The Committee concluded that this is not evidence of significant practical difficulties, and that it would not, in and of itself, result in fair value measurements that are clearly unreliable.
The Committee noted that
paragraph 125
of
Presentation of Financial Statements
[now
paragraph 31A
of
Basis of Preparation of Financial Statements
] requires an entity to disclose information about assumptions and estimates that have a significant risk of a material adjustment to the carrying amounts of assets and liabilities within the next financial year. In addition, paragraph 91 of IFRS 13
Fair Value Measurement
requires an entity to disclose information that helps users of its financial statements understand the valuation techniques and inputs used to develop fair value measurements, and the effect of measurements that use Level 3 inputs.
The Committee observed that the submission asks the Committee to conclude whether fair value measurements for a particular type of produce growing on bearer plants are clearly unreliable. The Committee determined that its role is not to conclude upon very specific application questions, particularly when they relate to the application of the judgements required in applying IFRS Standards. Consequently, the Committee decided not to add this matter to its standard-setting agenda.]
31
The presumption in
paragraph 30
can be rebutted only on initial recognition. An entity that has previously measured a
biological asset
at its
fair value
less
costs to sell
continues to measure the biological asset at its fair value less costs to sell until disposal.
32
In all cases, an entity measures
agricultural produce
at the point of
harvest
at its
fair value
less
costs to sell
. This Standard reflects the view that the fair value of agricultural produce at the point of harvest can always be measured reliably.
33
In determining cost, accumulated depreciation and accumulated impairment losses, an entity considers
,
and
Impairment of Assets
.
Government grants
[
Refer:
Basis for Conclusions paragraphs B63–B73
]
34
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.
35
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.
36
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.
37
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
),
is applied.
38
This Standard requires a different treatment from
, 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
.
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.
Disclosure
39
[Deleted]
General
[
Refer:
Basis for Conclusions paragraphs B74–B81
Illustrative Examples, example 1
]
40
An entity shall disclose the aggregate gain or loss arising during the current period on initial recognition of
biological assets
and
agricultural produce
and from the change in
fair value
less
costs to sell
of biological assets.
[
Refer:
Basis for Conclusions paragraphs B78 and B79
]
41
An entity shall provide a description of each group of
biological assets
.
42
The disclosure required by
paragraph 41
may take the form of a narrative or quantified description.
43
An entity is encouraged to provide a quantified description of each group of
biological assets
, distinguishing between consumable
[
Refer:
paragraph 44
]
and bearer
[
Refer:
paragraph 44
]
biological assets or between mature
[
Refer:
paragraph 45
]
and immature biological assets, as appropriate. For example, an entity may disclose the
carrying amounts
of consumable biological assets and bearer biological assets by group. An entity may further divide those carrying amounts between mature and immature assets. These distinctions provide information that may be helpful in assessing the timing of future cash flows. An entity discloses the basis for making any such distinctions.
44
Consumable
biological assets
are those that are to be
harvested
as
agricultural produce
or sold as biological assets. Examples of consumable biological assets are livestock intended for the production of meat, livestock held for sale, fish in farms, crops such as maize and wheat, produce on a bearer plant and trees being grown for lumber. Bearer biological assets are those other than consumable biological assets; for example, livestock from which milk is produced and fruit trees from which fruit is harvested. Bearer biological assets are not
agricultural produce
but, rather, are held to bear produce.
45
Biological assets
may be classified either as mature biological assets or immature biological assets. Mature biological assets are those that have attained harvestable specifications (for consumable
[
Refer:
paragraph 44
]
biological assets) or are able to sustain regular
harvests
(for bearer
[
Refer:
paragraph 44
]
biological assets).
46
If not disclosed elsewhere in information published with the financial statements, an entity shall describe:
(a)
the nature of its activities involving each group of
biological assets
; and
(b)
non‑financial measures or estimates of the physical quantities of:
(i)
each group of the entity’s biological assets at the end of the period; and
(ii)
output of
agricultural produce
during the period.
47–48
[Deleted]
49
An entity shall disclose:
(a)
the existence and
carrying amounts
of
biological assets
whose title is restricted, and the carrying amounts of biological assets pledged as security for liabilities;
(b)
the amount of commitments for the development or acquisition of biological assets; and
(c)
financial risk management strategies related to
agricultural activity
.
50
An entity shall disclose a reconciliation of changes in the
carrying amount
of
biological assets
between the beginning and the end of the current period. The reconciliation shall include:
(a)
the gain or loss arising from changes in
fair value
less
costs to sell
;
(b)
increases due to purchases;
(c)
decreases attributable to sales and
biological assets
classified as held for sale (or included in a disposal group that is classified as held for sale)
[
Refer:
IFRS 5 paragraphs 6–14
]
in accordance with
;
(d)
decreases due to
harvest
;
(e)
increases resulting from business combinations;
(f)
net exchange differences arising on the translation of financial statements into a different presentation currency, and on the translation of a foreign operation into the presentation currency of the reporting entity; and
(g)
other changes.
51
The
fair value
less
costs to sell
of a
biological asset
can change due to both physical changes and price changes in the market. Separate disclosure of physical and price changes is useful in appraising current period performance and future prospects, particularly when there is a production cycle of more than one year. In such cases, an entity is encouraged to disclose, by group or otherwise, the amount of change in fair value less costs to sell included in profit or loss due to physical changes and due to price changes. This information is generally less useful when the production cycle is less than one year (for example, when raising chickens or growing cereal crops).
[
Refer:
Basis for Conclusions paragraphs B74–B77
]
52
Biological transformation
results in a number of types of physical change—growth, degeneration, production, and procreation, each of which is observable and measurable. Each of those physical changes has a direct relationship to future economic benefits. A change in
fair value
of a
biological asset
due to
harvesting
is also a physical change.
53
Agricultural activity
is often exposed to climatic, disease and other natural risks. If an event occurs that gives rise to a material item of income or expense, the nature and amount of that item are disclosed in accordance with
Presentation and Disclosure in Financial Statements
. Examples of such an event include an outbreak of a virulent disease, a flood, a severe drought or frost, and a plague of insects.
Additional disclosures for biological assets where fair value cannot be measured reliably
54
If an entity measures
biological assets
at their cost less any accumulated depreciation and any accumulated impairment losses (see
paragraph 30
) at the end of the period, the entity shall disclose for such biological assets:
(a)
a description of the biological assets;
(b)
an explanation of why
fair value
cannot be measured reliably;
(c)
if possible, the range of estimates within which fair value is highly likely to lie;
(d)
the depreciation method used;
(e)
the useful lives or the depreciation rates used; and
(f)
the gross carrying amount and the accumulated depreciation (aggregated with accumulated impairment losses) at the beginning and end of the period.
55
If, during the current period, an entity measures
biological assets
at their cost less any accumulated depreciation and any accumulated impairment losses (see
paragraph 30
), an entity shall disclose any gain or loss recognised on disposal of such biological assets and the reconciliation required by
paragraph 50
shall disclose amounts related to such biological assets separately. In addition, the reconciliation shall include the following amounts included in profit or loss related to those biological assets:
(a)
impairment losses;
(b)
reversals of impairment losses; and
(c)
depreciation.
56
If the
fair value
of
biological assets
previously measured at their cost less any accumulated depreciation and any accumulated impairment losses becomes reliably measurable during the current period, an entity shall disclose for those biological assets:
(a)
a description of the biological assets;
(b)
an explanation of why fair value has become reliably measurable; and
(c)
the effect of the change.
Government grants
57
An entity shall disclose the following related to
agricultural activity
covered by this Standard:
(a)
the nature and extent of
government grants
recognised
[
Refer:
paragraphs 34–38
]
in the financial statements;
(b)
unfulfilled conditions and other contingencies attaching to government grants; and
(c)
significant decreases expected in the level of government grants.
Effective date and transition
58
This Standard becomes operative for annual financial statements covering periods beginning on or after 1 January 2003. Earlier application is encouraged. If an entity applies this Standard for periods beginning before 1 January 2003, it shall disclose that fact.
59
This Standard does not establish any specific transitional provisions. The adoption of this Standard is accounted for in accordance with
Accounting Policies, Changes in Accounting Estimates and Errors
.
1
60
Paragraphs 5
,
6
,
17, 20 and 21
were amended and paragraph 14 deleted by
Improvements to IFRSs
issued in May 2008. An entity shall apply those amendments prospectively for annual periods beginning on or after 1 January 2009. Earlier application is permitted. If an entity applies the amendments for an earlier period it shall disclose that fact.
[
Refer:
Basis for Conclusions paragraph BC10
]
61
, issued in May 2011, amended
paragraphs 8
,
15, 16
,
25
and
30
and deleted paragraphs 9, 17–21, 23, 47 and 48. An entity shall apply those amendments when it applies
.
62
Agriculture: Bearer Plants
(Amendments to IAS 16 and IAS 41), issued in June 2014, amended
paragraphs 1–5
,
8
,
24
and
44
and added
paragraphs 5A–5C
and
63
. An entity shall apply those amendments for annual periods beginning on or after 1 January 2016. Earlier application is permitted. If an entity applies those amendments for an earlier period, it shall disclose that fact. An entity shall apply those amendments retrospectively in accordance with
.
63
In the reporting period when
Agriculture: Bearer Plants
(Amendments to IAS 16 and IAS 41) is first applied an entity need not disclose the quantitative information required by
paragraph 28(f) of IAS 8
for the current period. However, an entity shall present the quantitative information required by paragraph 28(f) of IAS 8 for each prior period presented.
[
Refer:
IAS 16 Basis for Conclusions paragraphs BC97
]
64
, issued in January 2016, amended paragraph 2. An entity shall apply that amendment when it applies IFRS 16.
65
Annual Improvements to IFRS Standards 2018–2020
, issued in May 2020, amended paragraph 22. An entity shall apply that amendment to fair value measurements on or after the beginning of the first annual reporting period beginning on or after 1 January 2022. Earlier application is permitted. If an entity applies the amendment for an earlier period, it shall disclose that fact.
66
issued in April 2024 amended
paragraphs 50
and
53
. An entity shall apply those amendments when it applies
.
Board Approvals
Approval by the Board of
Agriculture: Bearer Plants
(Amendments to IAS 16 and IAS 41) issued in June 2014
Agriculture: Bearer Plants
was approved for issue by fourteen of the sixteen members of the International Accounting Standards Board. Mr Finnegan and Ms McConnell voted against its publication. Their dissenting opinions are set out after the Basis for Conclusions.
Hans Hoogervorst
Chairman
Ian Mackintosh
Vice-Chairman
Stephen Cooper
Philippe Danjou
Martin Edelmann
Jan Engström
Patrick Finnegan
Amaro Luiz de Oliveira Gomes
Gary Kabureck
Suzanne Lloyd
Patricia McConnell
Takatsugu Ochi
Darrel Scott
Chungwoo Suh
Mary Tokar
Wei-Guo Zhang
Footnotes
1
When it issued
Presentation and Disclosure in Financial Statements
in April 2024, the IASB changed the title of
to
Basis of Preparation of Financial Statements
.
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