Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition

Chapter 31

AGRICULTURE (IAS 41)

BACKGROUND AND INTRODUCTION

The main objective of IAS 41 is to establish accounting standards for agricultural activity. This Standard applies to biological assets, agricultural produce at the point of harvest, and government grants. The Standard does not apply to land related to agricultural activity, which is covered by IAS 16, Property, Plant, and Equipment, and IAS 40, Investment Property, or to intangible assets related to agricultural activity, which are covered by IAS 38, Intangible Assets.

DEFINITIONS OF KEY TERMS

(In accordance with IAS 41)

 

Agricultural produce. The harvested product of the entity’s biological assets, for example, milk and coffee beans.

Agricultural activity. The management of the biological transformation and harvest of the biological assets for sale or for conversion into agricultural produce or into additional biological assets.

Biological assets. Living plants and animals.

Biological transformation. Relates to the processes of growth, degeneration, and production that can cause changes of a quantitative or qualitative nature in a biological asset.

Active market. One where these conditions exist: The items traded in the market are homogenous; willing buyers and sellers normally can be found at any time; and prices are available to the public.

Fair value. The amount for which an asset can be exchanged or a liability settled in an arm’s-length transaction between knowledgeable and willing parties. The fair value of ...