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    Biological Asset: Agricultural Produce

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    LEILALYN NICOLAS
    IAS 41 applies to biological assets and agricultural produce. Biological assets include living animals and plants used in agriculture. Agricultural produce is the harvested output of biological assets. Examples of biological assets include sheep, trees, and dairy cattle. Wool, fruit, and milk are examples of agricultural produce. Bearer plants, which are used to grow agricultural produce for more than one period, are considered property, plant, and equipment rather than biological assets. Biological assets and agricultural produce are initially and subsequently measured at fair value less costs to sell. Any gains or losses from changes in fair value are recognized in profit or loss.

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    Biological Asset: Agricultural Produce

    Uploaded by

    LEILALYN NICOLAS
    21 views3 pages
    IAS 41 applies to biological assets and agricultural produce. Biological assets include living animals and plants used in agriculture. Agricultural produce is the harvested output of biological assets. Examples of biological assets include sheep, trees, and dairy cattle. Wool, fruit, and milk are examples of agricultural produce. Bearer plants, which are used to grow agricultural produce for more than one period, are considered property, plant, and equipment rather than biological assets. Biological assets and agricultural produce are initially and subsequently measured at fair value less costs to sell. Any gains or losses from changes in fair value are recognized in profit or loss.

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    BIOLOGICAL ASSET

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    IAS 41 applies to biological assets and agricultural produce. Biological assets include living animals and plants used in agriculture. Agricultural produce is the harvested output of biological assets. Examples of biological assets include sheep, trees, and dairy cattle. Wool, fruit, and milk are examples of agricultural produce. Bearer plants, which are used to grow agricultural produce for more than one period, are considered property, plant, and equipment rather than biological assets. Biological assets and agricultural produce are initially and subsequently measured at fair value less costs to sell. Any gains or losses from changes in fair value are recognized in profit or loss.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    21 views3 pages

    Biological Asset: Agricultural Produce

    Uploaded by

    LEILALYN NICOLAS
    IAS 41 applies to biological assets and agricultural produce. Biological assets include living animals and plants used in agriculture. Agricultural produce is the harvested output of biological assets. Examples of biological assets include sheep, trees, and dairy cattle. Wool, fruit, and milk are examples of agricultural produce. Bearer plants, which are used to grow agricultural produce for more than one period, are considered property, plant, and equipment rather than biological assets. Biological assets and agricultural produce are initially and subsequently measured at fair value less costs to sell. Any gains or losses from changes in fair value are recognized in profit or loss.

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    of 3

    AGRICULTURAL PRODUCE

    BIOLOGICAL ASSET
    • Wool
    (IAS/ PAS 41) applies to • Felled trees
    *Biological asset • Harvested cane
    *Agricultural produce • Milk
    *Government grants related to biological • Carcass
    asset • Leaf
    Agriculture: Title of the standard • Grapes
    • Picked Fruit

    PRODUCE AFTER HARVEST (Inventory-


    BIOLOGICAL ASSET IAS2)

    =Living plant or animals and their produce • Yarn, Carpet


    • Logs, Lumber
    Examples: • Sugar
    *Plantations, farms, poultry, aqua-culture • Cheese
    *Pigs, cow, Chicken, Trees • Sausage, cured ham
    • Tea, Cured tobacco
    • Wine
    Agricultural produce is the harvested • Processed fruit
    product of the entity’s biological asset.

    (Agricultural produce must be taken only at As defined in AIS 16 Property, Plant and
    the point of harvest. Kapag after harvest di Equipment and IAS 41 Agriculture, a bearer
    na nag-aapply si IAS 41- Inventories na) plant is a living plant that
    (PPE, Not biological asset)

    • Is used in the production or supply of


    EXAMPLES OF BIOLOGICAL ASSETS, agricultural produce;
    AGRICULTURAL PRODUCE AND THE
    PRODUCTS RESULT OF THEIR • Is expected to bear produce for more than
    PROCESSING one period;

    BIOLOGICAL ASSET • Has a remote likelihood of being sold as


    • Sheep agricultural produce, except for incidental
    • Trees in plantation forest scrap sales.
    • Plant (Yung puno na nagpoproduce ng more than
    • Dairy cattle 1 period, PPE. Yung bunga niya biological
    • Pigs asset. Kapag pinitas na agricultutal produce
    • Bushes kapag ginawa ng mango jam , inventory na)
    • Vines
    • Fruit trees
    IAS 41 in paragraph 5A stated that the BIOLOGICAL TRANSFORMATION
    following are not bearer plants:
    • Comprises the processes of growth,
    • Plants cultivated to be harvested as degeneration, production and procreation
    agricultural produce that cause qualitative or quantitative
    (Hindi bearer plant kasi sila mismo yung changes in a biological asset.
    kinucultivate at hinaharvest)
    1. Asset changes through:
    • Plants cultivated to produce agricultural a. GROWTH (May buhay kaya lumalaki)
    produce when there is more than a remote b. DEGENERATION (Nasira o namatay
    likelihood that the entity will also harvest kasi kinapitan ng insekto)
    and sell the plant as agricultural produce, c. PROCREATION (Nakapag produce ng
    other than as incidental scrap sales offspring)

    • Annual crops 2. Production of agricultural produce such


    as latex, tea leaf, wool and milk.
    All items above are classified as biological
    assets, rather than as bearer plants
    because their growth leads to their
    conversion as agricultural produce. RECOGNITION

    When bearer plants are no longer used to • The entity controls the asset as a result of
    bear produce, they may be cut down and past events.
    sold as scrap.
    • It is probable that future economic
    Bearer plants are included in the caption benefits associated with the asset will flow
    Property, Plant and Equipment and are to the entity.
    subject to the same measurement models
    • The fair value or cost of the asset can be
    applicable to property, plant and equipment.
    measured reliably.
    (Measurement rule for biological asset is
    Fair value less cost to sell or fair value less
    FEATURES OF AGRICULTURAL cost disposal)
    ACTIVITY (when cannot reliably determine the fair
    value less cost to sell- then use Cost)
    A. Capability to change (Merong biological
    transformation)
    B. Management of change (Iniincrease
    nutrient level, naglalagay fertilizers, MEASUREMENT
    nagcocontrol temperature)
    A biological asset shall be measured on
    C. Measurement of change
    initial recognition and at the end of each
    reporting period at fair value less costs of
    disposal

    Agricultural produce shall be measured at


    fair value less costs of disposal at the point
    of harvest.
    Cost of disposal disclose the 2 factors, (Increase in fair value
    due to physical change and increase in fair
    • the incremental cost directly attributable to value due to price change)
    the disposal of an asset The recognition of income is half into 2
    • Excludes transport cost, finance cost and components (The change of the fair value
    income tax. due to price change is the increase or
    (Kung hindi sana nagbenta ng biological decrease in the price of the biological asset
    asset, hindi sana maiincur yung cost na to) having the same characteristics of 2
    different
    Gain
    • May arise on initial recognition of
    biological asset, for example when a calf is
    born

    Loss
    • May arise on initial recognition of
    biological asset because cost of disposal
    are deducted in determining fair value less
    cost of disposal of biological asset

    A gain and loss may arise on initial


    recognition of agricultural produce as a
    result of harvesting which shall also be
    included in profit or loss

    (The fair value less cost to sell may or may


    not be equal to the purchase price. If that is
    the situation, at initial recognition you will
    recognize gain or loss)

    (Because of the capability to change of the


    biological asset, nagiincrease fair value ng
    biological asset. We have disclosure with
    respect to biological asset and with respect
    to increase in fair value)

    (The fair value of biological asset can


    change due to price changes in the market
    and physical changes, although it does not
    require, it encourages separate disclosure
    of 2 elements

    Why encourage? Because disclosing such


    will be useful in appraising current period
    performance and future prospects
    particularly when production cycle is more
    than 1 year. If the company decides to

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