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IAS 41 Biological Asset
Definition
• Agriculture activity is the management by an entity of the biological
transfomation of biological asset for sale, into agricultral product or
into additional biological asset.
• Agriculture produce is the harvested product of an entity's biological
asset.
• Biological assets are living animals or plants.
• Biological transformation compromises the processes of growth,
degeneration, production and procreation that cause qulitative and
quantitative changes in biological asset.
• Harvest is the detachment of produce from a biological asset or
cessation of biological asset's life processes.
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IAS 41 Biological Asset
• FV is the price that would be receives to sell an asset or
paid to transfer a liability in an ordely transaction between
market participants at measurement date.(IFRS 13)
• Carrying amount is the amount at which an asset is
recognized in the SFP.
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
IAS 41 Biological Asset
Recognition
• The entity controls the assets as result of past event.
• It is probable that the future economic benefits associated
with the asset will flow to the entity.
• The FV or cost of the asset to the entity can be measured
realiably.
Mesurement
• At each year end all biological asset should be measured
at FV less estimate point-of-sale costs.
• If a FV cannot be determined beacuse market determined
price or values are not available. Then the biological asset
can be meaured at cost less accumulated depreciation
and impairement losses.
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
IAS 41 Biological Asset
Presentation and disclosure
• In the SFP biological assets should be classified as
seprate class of asset falling under either current or noncurrent classifications.
• Biological asset should be subclassified into:
1) Class of animal or plant
2) Nature of activities (consumable or bearer)
3) Maturity or inmaturiy for intended purpose.
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
IAS 41 Biological Asset
• Agriculture produce: it is recogonized at the point of harvest (eg:
detachment from biological asset). Agriculture produce is either
incapable of biological process or such process remain dormant (eg.
stored grain).
• Recognition ends once the produces enters trading activities or
production processes.
• Agriculture produce should be measured at each year end at FV less
estimated point-of-sale costs. The change in carrying amount of
agriculture produce held at year end should be recognized as income
or expense in profit or loss.
• Agriculture produce should be classified as inventory in SFP and
disclosed seperately either in the SFP or in the notes.
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.