PAS 41 - Agriculture
- covers the measurement of biological assets and agricultural produce
- does not deal with the processing of agricultural produce after harvest
- shall be applied to account for biological assets, agricultural produce and government
grant related to a biological asset (BAG when the! relate to agricultural activit!
- applied to agricultural produce at the point of harvest
- under the Basis for "onclusions on PAS 41, costs of disposal specificall! exclude
transport costs, finance costs and income ta#es
- the principles espoused in here for biological assets and agricultural produce do not
appl! to agricultural land
- separating the change in $% between the portion attributable to price change and the
portion attributable to ph!sical change is encouraged but not required b! PAS 41
PAS & on inventories
- covers the measurement of products after harvest
- After that date, PAS & shall appl!' (his means that the inventor! shall be measured at
the lower of cost and )*%'
- e#ample+ the processing of grapes into wine
PAS 1, re-uirements
- applicable to PP.
- appl! e-uall! to agricultural land for purposes of measurement
PAS &/ on government grant
- applied if a government grant relates to a biological asset measured at "ost - an! Acc
0epr - an! Acc 12
BIOLOGICAL ASSETS: living animals and living plants; agricultural land is not
deemed a biological asset
Agricultural produce: the harvested product of an entitys biological assets
Harvest: the detachment of produce from a biological asset or the cessation of a
biological assets life processes
(he harvested product is recorded b! debiting inventor! and crediting gain from
change in fair value'
Product after harvest: product that is the result of processing after harvest
Agricultural activity or siply !agriculture": the anageent by an entity of a
biological transformation and harvest of biological assets
for sale or
for conversion into agricultural produce or
into additional biological assets
Examples on p. 54
#eatures of agricultural activity
!. "iological assets are capable of biological transformation.
". #he agricultural activity must be managed.
$. $hange in %uality&%uantity brought about by biological transformation&harvest '
measured and monitored as a routine management function
Biological transforation
' comprises the processes of gro(th) degeneration) production and procreation that cause
%ualitative or %uantitative changes in a biological asset
' results from the follo(ing types of outcome:
*. !sset changes through:
!. Growth ' an increase in %uantity or improvement in %uality of an animal or
plant
". 0egeneration ' a decrease in %uantity or deterioration in %uality of an animal
or plant
$. Procreation ' creation of additional biological asset
+. ,roduction of agricultural produce -latex) tea leaf) (ool and mil./
$ecognition %&iological asset or agricultural produce'
*. $ontrol -legal o(nership) branding or mar.ing/ as a result of past events
+. ,robable 0E" -0E" normally assessed by measuring significant physical attributes/
1. 02 or cost of the asset can be measured reliably
(easureent
Biological asset -*/ on initial recognition and -+/ at the end of each reporting period
#) of &iological asset less costs of disposal
Agricultural produce at the point of harvest
#) of agricultural produce at the point of harvest less costs of disposal
' in all cases
' stops at the point of harvest
After that date, PAS & shall appl!' (his means that the inventor! shall be
measured at the lower of cost and )*%'
Costs of disposal
' the incremental costs directly attributable to the disposal of an asset
' include costs that are necessary for a sale to occur but that (ould not other(ise arise
$ommissions to bro.ers and dealers
#ransfer taxes and duties
3evies by regulatory agencies and commodity exchanges
- under the Basis for "onclusions on PAS 41, costs of disposal specificall! exclude
transport costs, finance costs and income ta#es
#) of &iological asset
' presumption: this can be measured reliably -can be rebutted only on initial recognition/
' if not available) the biological asset shall be measured at Cost - Acc Depr - any Acc IL
' if already available) ad4ust biological asset to 02 ' costs of diposal
#) of agricultural produce at the point of harvest
' can al*ays &e easured relia&ly
Gain+loss
' on initial recognition -*hen a calf is &orn&costs of disposal/ of a &iological asset at fair
value less costs of disposal and an! subse-uent changes in fair value less costs of
disposal
' may arise on initial recognition of agricultural produce as a result of harvesting
' disclose:
#he aggregate gain or loss arising
5n the initial recognition of biological assets and agricultural produce and
0rom the change in fair value less costs of disposal of biological asset
Biological assets attached to land
' for example) trees in a plantation forest
' there may be no separate ar,et for these but an active mar.et may exist for the
co&ined assets -biological assets and land as a pac.age/
' an entity may use information regarding the combined assets to determine the fair value
of the biological assets
Governent grant
' unconditional related to a biological asset measured at fair value less cost of disposal
6hall be recogni7ed as income (hen the grant becomes receivable
' conditional related to a biological asset measured at fair value less cost of disposal
6hall be recogni7ed as income only (hen the conditions attaching to the grant are
met
See illustration on p' 334
#S presentation
60, ' fair value) noncurrent asset
86 ' gain from change in 02
Included in
P+L
Price change and physical change
Price change
' same age) diff date
' computation: latest date
' bumili siya ng 1 yrs old co( on 9*&9*&*1
02 on *+&1* of 1 yrs old co(
-!$ on 9*&9* of 1 yrs old co(/
,rice change
' ne(born calf on 9&9*
02 on *+&1* of ne(born calf
-02 on 9&9* of ne(born calf/
,rice change
Ph!sical change
' at birth
' diff age) same date
' computation: latest age
02 on *+&1* of 4 yrs old co(
-02 on *+&1* of 1 yrs old co(/
,hysical change
02 on *+&1* of *&+ year old calf
-02 on *+&1* of ne(born calf/
,hysical change
Suary
,rice change:
4 yrs old co(s -*99 co(s x 1999 price change/ 199)999
*&+ yr old calves -+9 calves x *999 price change/ +9)999 1+9)999
,hysical change:
4 yrs old co(s -*99 co(s x :999 physical change/ :99)999
*&+ yr old calves -+9 calves x +999 physical change/ 49)999
!t birth -+9 calves x 02 of 4999 each/ ;9)999 +9)999
#otal change in 02 *949)999
See illustration on p' 33,
plantation forestry entity might report no income until
frst harvest and sale, perhaps 30 years after planting. On the other hand, an
accounting model that recognises and measures biological growth using current
fair values reports changes in fair value throughout the period between planting
and harvest.
Biological assets that are physically attached to
land (for example, trees in a plantation forest are measured at their fair value less
costs to sell separately from the land.
!ot applicable to"
#and
$ntangible assets
% group of biological assets is an aggregation of similar living animals or plants.
%gricultural activity"
&'apability to change
&(anagement of change.
&(easurement of change.
active mar)et"
*items traded within the mar)et are homogeneous
*willing buyers and sellers can normally be found at any time
*prices are available to the public.
+he fair value of an asset is based on its present location and condition.
,ecognition
-he entity controls the asset as a result of past events.
-it is probable that future economic benefts associated with the asset will
/ow to the entity.
-the fair value or cost of the asset can be measured reliably.
'ontract prices are not necessarily relevant in
determining fair value,
