FINANCIAL ACCOUNTING ACCOUNTING AND REPORTING
The objective of PAS 41 is to establish standads of acco!ntin" fo a"ic!lt!al activit# -- the $ana"e$ent of the biolo"ical tansfo$ation of biolo"ical assets %livin" &lants and ani$als' into a"ic!lt!al &od!ce %havested &od!ct of the ente&ise(s biolo"ical assets') ** PAS 41 is a&&lied to a"ic!lt!al &od!ce ) It doesn+t deal ,ith the &ocessin" of a"ic!lt!al &od!ce afte havest %e") Pocessin" "a&es into ,ine') ** The $eas!e$ent of biolo"ical assets and a"ic!lt!al &od!ce is coveed b# PAS 41 ,hile the $eas!e$ent of &od!cts afte havest is coveed b# PA PAS S on inventoies)
is the $ana"e$ent b# an entit# of the biolo"ical tansfo$ation of biolo"ical assets fo sale2 into a"ic!lt!al &od!ce2 o into additional biolo"ical assets) %e") Raisin" livestoc32 A!ac!lt!e A!ac!lt!e incl!din" fish fa$in"2 foest# and etc' a) b) c)
Ca&abilit Ca&abilit## to Chan"eChan"e- livin livin"" ani$als ani$als and &lants &lants ae ca&able ca&able of of biolo"ical biolo"ical tansfo$ tansfo$ation ation)) 6ana" ana"e$ e$en entt of Chan"e an"e 6eas!e$e 6eas!e$ent nt of Chan"eChan"e- chan"e chan"e in !alit# !alit#!an !antit# tit# bo!"ht bo!"ht b# biolo" biolo"ical ical tansfo tansfo$ati $ation on is $eas!ed $eas!ed and and $onitoed) is the havested &od!ct of the entit#+s biolo"ical assets) is a livin" ani$al o &lant) A co$&ises the &ocesses of "o,th2 de"eneation2 &od!ction2 and &oceation that ca!se !alitative o !antitative chan"es in a biolo"ical asset) 1)Asset chan"es tho!"h0 a) Go,thGo,th- incease incease in in !antit# !antit# o i$&ov i$&ove$ent e$ent in in !alit# !alit# of an an ani$al ani$al o &lant) &lant) b) /e"eneat /e"eneationion- decease decease in !antit !antit## o deteioat deteioation ion in !alit# !alit# of an ani$al ani$al o &lant) &lant) c) Poceati Poceationon- ceatio ceationn of additional additional livin" livin" ani$als ani$als o &lant) &lant) )Pod!ction of a"ic!lt!al &od!ce s!ch as late82 tea leaf2 $il3 and etc) is an a""e"ation of si$ila livin" ani$als o &lants) A is the detach$ent of &od!ce fo$ a biolo"ical asset o the cessation of a biolo"ical asset+s life &ocesses) is a livin" &lant that0 a) Is !sed !sed in in the &od!ction &od!ction &ocess &ocess of a"ic!lt! a"ic!lt!al al &od!ce &od!ce22 b) Is e8&ec e8&ected ted to to bea bea &od!ce &od!ce fo fo $oe $oe than than one one &eiod &eiod c) 9as a e$ote e$ote li3eliho li3elihood od of bein" bein" sold %e8ce&t %e8ce&t as &at &at of incident incidental al sca& sca& sales') sales') ** At the end of thei &od!ctive life2 beae &lants ae !s!all# sca&&ed and no lon"e si"nificant in "eneatin" f!t!e econo$ic benefit)
An ente&ise sho!ld eco"ni:e eco"ni:e a biolo"ical asset asset o a"ic!lt!e &od!ce onl# onl# ,hen0 a) The The ente ente& &i isse the asset as a es!lt of &ast events2 b) It is &ob &obab able le that that ,ill flo, to the ente&ise2 c) And the the fai fai val! val!ee o cost cost of the the asset asset can be be )
shall be $eas!ed on initial eco"nition and at the end of each e&otin" dates at 2 !nless fai val!e cannot be eliabl# $eas!ed; it shall be $eas!ed at cost less an# acc!$!lated de&eciation and i$&ai$ent losses)
A"ic!lt!al &od!ce sho!ld be $eas!ed at ) 7eca!se havested &od!ce is a $a3etable co$$odit#2 thee is no ($eas!e$ent eliabilit#( e8ce&tion fo &od!ce) ** Unde PAS 412 cost of dis&osal e8cl!des tans&ot cost2 finance cost and inco$e ta8)
The "ainloss on initial eco"nition of biolo"ical assets at fai val!e less cost of dis&osal2 and chan"es in fai val!e less cost of dis&osal of biolo"ical assets d!in" a &eiod2 ae e&oted in net fo the &eiod in ,hich it aises)
A "ainloss on initial eco"nition of a"ic!lt!al &od!ce as a es!lt of havestin" sho!ld be incl!ded in net &ofit o loss fo the &eiod in ,hich it aises) PAGE 1
FINANCIAL ACCOUNTING AND REPORTING
All costs elated to biolo"ical assets that ae $eas!ed at fai val!e ae eco"ni:ed as e8&enses ,hen inc!ed2 othe than costs to &!chase biolo"ical assets)
ae acco!nted fo !nde PAS 1< !sin" the cost $odel2 o the eval!ation $odel) 7efoe beae &lants ae able to bea a"ic!lt!al &od!ce %i)e) befoe $at!it#'2 the# ae acco!nted fo as self-const!cted ite$s of &o&et#2 &lant and e!i&$ent) The a"ic!lt!al &od!ce of the beae &lant e$ains ,ithin the sco&e of PAS 41 and is theefoe acco!nted fo at fai val!e)
PAS 41 &es!$es that fai val!e can be eliabl# $eas!ed fo $ost biolo"ical assets) 9o,eve2 that &es!$&tion can be eb!tted fo a biolo"ical asset that2 at the ti$e it is initiall# eco"ni:ed in financial state$ents) In s!ch a case2 the asset is $eas!ed at cost less acc!$!lated de&eciation and i$&ai$ent losses if the asset does not have a !oted $a3et &ice in an active $a3et and fo ,hich othe $ethods of easonabl# esti$atin" fai val!e ae dete$ined to be cleal# ina&&o&iate o !n,o3able)
7!t the ente&ise $!st still $eas!e all of its othe biolo"ical assets at fai val!e) If cic!$stances chan"e and fai val!e beco$es eliabl# $eas!able2 a s,itch to fai val!e less dis&osal costs is e!ied)
a) Co$$ission to bo3e and deales b) Levies b# e"!lato# a"encies and co$$odit# e8chan"es c) Tansfe ta8es and d!ties ** It doesn+t incl!de Tans&ot and othe cost necessa# to "et the assets to a $a3et beca!se s!ch costs have alead# been consideed in dete$inin" fai val!e) - PAS 412 Pa 14
A !oted $a3et &ice in an active $a3et fo a biolo"ical asset o a"ic!lt!al &od!ce is the $ost eliable basis fo dete$inin" the fai val!e of that asset) If an active $a3et does not e8ist2 PAS 41 &ovides "!idance fo choosin" anothe $eas!e$ent basis) 5ist choice ,o!ld be a $a3et-dete$ined &ice s!ch as the $ost ecent $a3et &ice fo that t#&e of asset2 o $a3et &ices fo si$ila o elated assets; if eliable $a3et-based &ices ae not available2 the &esent val!e of e8&ected net cash flo,s fo$ the asset sho!ld be !se2 disco!nted at a c!ent $a3et-dete$ined &e-ta8 ate) In li$ited cic!$stances2 cost is an indicato of fai val!e2 ,hee little biolo"ical tansfo$ation has ta3en &lace o the i$&act of biolo"ical tansfo$ation on &ice is not e8&ected to be $ateial) The fai val!e of a biolo"ical asset is based on c!ent !oted $a3et &ices and is not adj!sted to eflect the act!al &ice in a bindin" sale contact that &ovides fo delive# at a f!t!e date)
5ai =al!e 9ieach# o 7est evidence of fai val!e !nde P5RS 1>2 Pa ?0 1) Level 1 in&!ts ae the !oted &ices in an active $a3et fo identical assets) Active 6a3et is a $a3et in ,hich tansactions fo the asset o liabilit# ta3e &lace ,ith s!fficient e"!lato# and vol!$e to &ovide &icin" info$ation on an on"oin" basis ,hile Pinci&al 6a3et is the $a3et ,ith the "eatest vol!$e and level of activit# fo the asset o liabilit#) ) Level in&!ts ae in&!ts that ae obsevable eithe diectl# o indiectl#) It incl!des !oted &ices fo si$ila assets in an active $a3et and !oted &ices fo identical o si$ila assets in a $a3et that is not active) >) Level > in&!ts ae !nobsevable in&!ts fo the asset) The# ae !s!all# develo&ed b# the entit# !sin" the best available info$ation fo$ the entit#+s o,n data)
a) The chan"e in fai val!e of biolo"ical assets is &at %"o,th2 etc)' and ) Se&aate disclos!e of the t,o co$&onents is enco!a"ed2 not e!ied) b) 5ai val!e $eas!e$ent c)
) PAS 2 Inventoies2 a&&lies afte havest)
A"ic!lt!al land is acco!nted fo !nde PAS 1<2 Po&et#2 Plant and E!i&$ent) 9o,eve2 biolo"ical assets that ae &h#sicall# attached to land ae $eas!ed as biolo"ical assets se&aate fo$ the land)
d) Intan"ible assets elatin" to a"ic!lt!al activit# %fo e8a$&le2 $il3 !otas' ae acco!nted fo !nde PAS >@2 Intan"ible Assets) d) Unconditional "oven$ent "ants eceived in es&ect of biolo"ical assets $eas!ed at fai val!e less cost of dis&osal ae e&oted as inco$e ,hen the "ant beco$es eceivable) hen it is Conditional2 the "ant shall be eco"ni:ed as inco$e onl# ,hen the conditions attachin" to the "ant ae $et) ** If a "oven$ent "ant elates to a biolo"ical asset $eas!ed at cost less an# acc!$!lated de&eciation and an# acc!$!lated i$&ai$ent losses2 Pas B is a&&lied)
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FINANCIAL ACCOUNTING AND REPORTING
6ana"in" eceational activities %e") Ga$e &a3s and :oo' is not a"ic!lt!al activit# beca!se thee+s no $ana"e$ent of the tansfo$ation of biolo"ical asset b!t si$&l# contol of the n!$be of ani$als and nat!al beedin" is incidental onl# to the $ain activit# of &ovidin" a eceational facilit#)
Thee $a# be no se&aate $a3et fo biolo"ical assets that attached to the land b!t an active $a3et $a# e8ist
fo the co$bined assets2 that ae the biolo"ical assets2 the land and the oad !nde the foest2 as a &ac3a"e2 an entit# $a# !se info$ation e"adin" the co$bined assets to dete$ine fai val!e fo the biolo"ical assets) It is not dee$ed a biolo"ical asset b!t acco!nted fo as PPE !nde PAS 1<)
e!ie$ents in PAS 41 incl!de0
Ca#in" a$o!nt of biolo"ical assets /esci&tion of an ente&ise(s biolo"ical assets2 b# boad "o!& Chan"e in fai val!e d!in" the &eiod 5ai val!e of a"ic!lt!al &od!ce havested d!in" the &eiod /esci&tion of the nat!e of an ente&ise(s activities ,ith each "o!& of biolo"ical assets and non-financial $eas!es o esti$ates of &h#sical !antities of o!t&!t d!in" the &eiod and assets on hand at the end of the &eiod Info$ation abo!t biolo"ical assets ,hose title is esticted o that ae &led"ed as sec!it# Co$$it$ents fo develo&$ent o ac!isition of biolo"ical assets 5inancial is3 $ana"e$ent state"ies 6ethods and ass!$&tions fo dete$inin" fai val!e Reconciliation of chan"es in the ca#in" a$o!nt of biolo"ical assets2 sho,in" se&aatel# chan"es in val!e2 &!chases2 sales2 havestin"2 b!siness co$binations2 and foei"n e8chan"e diffeences
/isclos!e of a !antified desci&tion of each "o!& of biolo"ical assets2 distin"!ishin" bet,een cons!$able and beae assets o bet,een $at!e and i$$at!e assets2 is enco!a"ed b!t not e!ied) If fai val!e cannot be $eas!ed eliabl#2 additional e!ied disclos!es incl!de0 /esci&tion of the assets An e8&lanation of the cic!$stances If &ossible2 a an"e ,ithin ,hich fai val!e is hi"hl# li3el# to fall Gain o loss eco"ni:ed on dis&osal /e&eciation $ethod Usef!l lives o de&eciation ates Goss ca#in" a$o!nt and the acc!$!lated de&eciation2 be"innin" and endin"
If the fai val!e of biolo"ical assets &evio!sl# $eas!ed at cost no, beco$es available2 cetain additional disclos!es ae e!ied) /isclos!es elatin" to "oven$ent "ants incl!de the nat!e and e8tent of "ants2 !nf!lfilled conditions2 and si"nificant deceases in the e8&ected level of "ants)
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