Topic 11- Other standards IAS 41 Agriculture Flashcards
what are some of the terms we need to understand for IAS 41
5
Agriculture activity Biological assets Harvest Agriculture produce Bearer Plants
what is a biological asset and how are they measured
A biological asset is a living animal or plant. An example of biological assets would be cows or sheep.
Wheat, sugar cane or trees, animal babies
They are measured initially and at reporting date at FV - Cost to sell. Should be shown separately on SoFP
They produce the agricultural produce. If they do not then they are bit biological assets e.g. sheep dog, cart horses (IAS 16 PPE)
what is a Agriculture produce and how is it measured
Agricultural produce is the harvested produce of biological assets.
e.g. the wool from sheep
After produce has been harvested IAS 41 ceases to apply and IAS 2 Inventories
What is agricultural activity
Agricultural activity is the management by an enterprise of the biological transformation of biological assets for sale, into agricultural produce, or into additional biological assets.
what is harvest, give an example
and how it is measured
A harvest is the detachment of produce from a biological asset or the cessation of a biological asset’s life process.
e.g. slaughter house or milk
Under IAS 41, harvested produce should be valued at ( FV - cost to sell) and then would be classified as inventory under IAS 2 after which it is no longer revalued.
what is bearer plants and how are they measured
A bearer plant is a living plant used in production or supply of agricultural produce and it is expected that it will produce for more than one period. E.g. fruit trees, suger cane
As it is impractical to calculate the fair value of a bearer plant each reporting period these are outside the scope of IAS 41 and would be accounted for under IAS 16 Property, plant and equipment. (i.e. cost)
when can a biological asset or agriculture produce be recognised?
3 criterias
When only:
- The company controls the asset as a result of past events
- It is probably that the future economic benefits will flow to the entity and
- The fair value or cost of the asset can be reliably measured
what is the initial measurement of IAS 41 Agriculture item
Fair value less cost to sell
what is the subsequent measurement
As the initial measurement is Fair value less cost to sell
The subsequent measurement :
- Revalue to fair value less costs to sell at year end
as IAS 41 Measurement is done with Fair value less cost to sell
where are the gain or losses taken
to the SoP/L.
What kind of cost to sell are allowed in relation to biological assets and harvested produce
and what cost specifically is not allowed
commissions charged on sale or levies charged by the local agricultural authority.
It does not include transport.
Agricultural produce is the harvested produce of biological assets.
e.g. the wool from sheep
how are these measured initially and at each reporting date
After produce has been harvested IAS 41 ceases to apply and IAS 2 Inventories
A harvest is the detachment of produce from a biological asset or the cessation of a biological asset’s life process. e.g. slaughter house
how are these measured initially and at each reporting date
how are these shown on SOFP
measured at fair value less costs to sell at the point it is harvested and would be classified as inventory under IAS 2.
It is not revalued.
identify the following
- Cattle
- Cheese
- Sugercane
- Sheep dog
- Cart Horse
- Fruit trees
- Milk
- Cattle IAS 41
- Cheese IAS 2.
- Sheep dog IAS 16
- Cart Horse IAS 16
- Fruit trees IAS 16
- Milk Valued under IAS 41 then = inventory
cattle is measure under which standard
*Cattle IAS 41
