BIOLOGICAL ASSETS - Living animals and living plants

AGRICULTURAL ACTIVITY
A. Consumable Biological Assets Management by an entity of the biological transformation and
★ Those that are to be harvested as agricultural produce/ harvest of biological assets for sale or for conversion into
sold as biological assets agricultural produce or into additional biological assets.
1. Livestock intended for production of meat
2. Livestock held for sale Examples: Raising Livestock, Forestry, Annual or Perennial
3. Fish in Farms Cropping, Cultivating orchard and plantations, Floriculture, and
4. Crops (maize and wheat) aquaculture (including fish farming)
5. Produce on Bearer Plant
6. Trees being grown for Lumber
Biological assets & Agricultural produce - accounted only if
relate to agricultural activity
B. Bearer Biological Assets
★ Those that are held to bear produce. Only the produce
is harvested while the bearer biological asset remains. COMMON FEATURES OF AGRICULTURAL ACTIVITY
1. Livestock which milk is produced
2. Fruit trees which fruit is harvested A. Capability to Change - living animals & plants are capable
of biological transformation
Living animals, consumable or not, are classified as biological
B. Management of Change - management facilitated
assets if they relate to agricultural activity.
biological transformation by enhancing/ stabilizing conditions
However, living plants are classified as biological assets only if necessary for the process to take place. Such management
they are consumable. distinguished agricultural activity from others.
Bearer Plants = classified as PPE
Example: Harvesting from unmanaged sources (e.g ocean
fishing/deforestation is not an agricultural activity) is not
TAKE NOTE: Bearer Plants is a living plant that: agricultural activity.
A. Used in production/supply of agricultural produce
B. Expected to bear produce for more than one period; & C. Measurement of Change - change in quality or quantity
C. Has a remote likelihood of being sold as agricultural brought about by biological transformation or harvest is
produce, except for incidental scrap sales. measured and monitored as a routine management function.
D. Used solely to grow
BIOLOGICAL TRANSFORMATION
Plants that are to be harvested as agricultural produce are not Comprises the following processes that cause qualitative or
bearer plants. quantitative changes in biological assets:
I. Asset changes through
Example: a. Growth - increase ⬆ in quantity/
(1) Tree to be cut down used as lumber - consumable
improvement in quality of an animal/plant
plant = Biological Asset
(2) Tree that bear fruits - only fruits are harvested, tree b. Procreation - creation of additional living
remains - bearer plant = PPE animals/plants
c. Degeneration - decrease ⬇ in quantity/
Bearer plants may be sold as scrap when no longer used = not deterioration in quality of an animal/plant
necessarily precluded from being classified as bearer plants II. Production of agricultural produce
Annual crops & similar plants that die once their produce has RECOGNITION
been harvested - consumable plant = Biological Asset
An entity shall recognized a biological asset or agricultural
Only plants that bear produce repeatedly over a long period of produce when it meets asset recognition criteria:
time are considered bearer plants (PPE) a. Entity controls asset result of past events
b. Probable that future economic benefit will flow
AGRICULTURAL PRODUCT c. Fair value/cost of asset can be measured reliably
Harvested produce of the entity’s biological assets. Those that
MEASUREMENT
are in their natural state and not yet processed. (Already subj to
processing - inventories PAS 2) Biological ★ Initially and subsequently measured at
Assets FAIR VALUE less costs to sell/cost
Harvest - detachment of produce from a biological asset/ of disposal
cessation of a biological asset’s life processes.
Biological ★ Initially measured AT COST
Assets
whose FV ★ Subsequently measured AT COST
cannot be less accumulated depreciation &
determined accum impairment losses.

★ Once fair value becomes reliably

measurable, biological asset is
measured at its FAIR VALUE less
costs to sell/cost of disposal

Agricultural ★ In all cases, initially measured at FAIR

Produce VALUE less costs to sell/ cost of
(bio asset) disposal at the point of harvest
 GAINS AND LOSSES ON BIOLOGICAL ASSETS AND GOVERNMENT GRANTS
AGRICULTURAL PRODUCE
Only government grants related to biological assets measured at
FV less cost to sell are accounted for PAS 41.
Arising from initial measurement
of biological asset ★ Recognized Those related to bio asset measured at cost less accumulated
in profit or
And subsequent changes in FV depreciation and impairment losses are accounted for PAS 20
loss
less costs to sell
UNDER PAS 41, if the Government Grant is:
Arising from initial measurement ★ Recognized A. Unconditional - grant in profit or loss when it becomes
of agricultural produce in profit or receivable
loss
B. Conditional - grant recognized in profit or loss when the
EXAMPLE: FROM INITIAL RECO OF BIOLOGICAL ASSET
attached conditions are met.
★ Gain - when calf is born
★ Loss - bcs cost to sell are deducted from FV less C. Conditional but terms of the grant allow part of it to be
cost of disposal of biological asset retained according to the time that has elapsed - a portion of
the grant is recognized in profit or loss as time passes. (e.g on
EXAMPLE: FROM INITIAL RECO OF AGRI PRODUCE straight-line basis)
★ Gain - result of harvesting which shall also be
included in profit and loss
TAKE NOTE: GENERAL DISCLOSURE
A. The aggregate gain/loss arising on initial recognition
Fair Value
of biological assets & agricultural produce and from
★ The price that would be received and sell an asset or
change in FV less costs to sell bio assets.
paid to transfer a liability in an orderly transaction
B. Description of each group of bio assets
between market participants at the measurement date.
C. Description of nature of activities involving each
group of biological assets and physical quantities of
Costs To Sell
assets on hand at the end of the period and output of
★ Incremental costs directly attributable to the disposal
agricultural produce during the period.
of an asset, excluding finance costs and income taxes.
D. Restrictions on titled to biological assets
E. Commitments for development or acquisition of
Bearer Animals, like bearer plants, may be held solely for the biological assets
produce they bear but continue to be reported as F. Financial risk management strategies related to
BIOLOGICAL ASSET.
agricultural activity
Animal-related recreational activities (e.g. zoo) not G. Reconciliation of changes in carrying amount of
agricultural activity, simply control of no. of animals. = biological assets, showing separately changes in FV
classified as PPE less costs to sell, purchases, sales, harvesting,
business combinations, and foreign exchange
An entity uses PFRS 13 Fair Value Measurement in differences.
measuring FV of biological assets and agricultural produce.
TAKE NOTE: ENCOURAGED DISCLOSURE
Contract prices are not necessarily relevant when measuring A. Consumable and bearer biological assets
FV, thus, It is not adjusted by the existence of a contract. B. Mature and immature biological assets
C. Change in FV less cost to sell during period ( info is
Cash flows for financing the assets or reestablishing biological useful if production cycle extends beyond one year )
assets after harvest are not considered when measuring FV. 1. due to price change, and
2. due to physical change
TAKE NOTE: Cost may sometimes approximate FV:
MATURE BIOLOGICAL ASSETS
A. Little biological transformation has taken place since
★ Those that have attained harvestable specifications
initial cost incurrence (seedlings planted immediately
(for consumable biological assets) or are able to
prior to the end of a reporting period or newly
sustain regular harvests (for bearer biological assets)
acquired livestock)
B. Impact of biological transformation on price is not
expected to be material (e.g. initial growth in a DISCLOSURE FOR BIO ASSET MEASURED AT COST
30-year pine tree plantation production cycle) A. Description of the Assets
B. An explanation why FV cannot be reliably measured
Biological Assets attached to land C. If possible, range within which FV is highly likely to lie
May not have a separate market but an active market may exist D. Depreciation method, useful lives or dept rates
for the combined assets (i.e biological assets, raw land, and land E. Reconciliation of gross carrying amount and
improvements) as a package. accumulated depreciation at beg and end of reporting
★ FV of raw land/land improvement may be deducted period, showing info on depreciation, impairment
from FV of combined assets to arrive at FV of loss, and reversal of impairment loss.
biological assets
TAKE NOTE: DISCLOSURE FOR GOV GRANTS
Biological Assets previously measured at FV less cost to sell A. Nature and extent of recognized government grants
is continued to be measured that way until it is disposed of. B. Unfulfilled conditions
C. Significant decreases ⬇ expected in level of
government grants