IAS 41 Agriculture

International Accounting Standard 41

Overview of IAS 41

  • Issued: issued in 2000, followed by amendments
  • Effective date: 1 January 2003
  • What it does:
    • IAS 41 applies to biological assets, agricultural activity and government grants related to biological assets measured at fair value less costs to sell.
    • It Standard provides definitions of:
      • Agricultural activity (and its examples: raising livestock, cropping, cultivating orchards and plantations, etc.),
      • Biological transformation,
      • Biological asset (living animal or plant),
      • Bearer plant,
      • Agricultural produce (harvested product of entity’s biological assets), etc.
    • IAS 41 sets 3 recognition criteria for biological asset or agricultural produce:
      1. Control of an asset by the entity as a result of past events;
      2. Probable future economic benefits will flow to the entity; and
      3. Fair value or cost of the asset can be measured reliably.
    • A biological asset shall be measured on initial recognition and at the end of each reporting period at its fair value less costs to sell.
    • Agricultural produceharvested from an entity’s biological assets shall be measured at its fair value less costs to sell at the point of harvest.
    • IAS 41 then deals with gains and losses, inability to measure fair value reliably, provides rules for government grants related to biological assets.
    • IAS 41 requires number of disclosures.
    • Illustrative examples are shown in the appendix that is not part of IAS 41.

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