Biological Asset and Agricultural Products

According to IAS 41.12, 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.

According to IAS 41.13, Agricultural produce harvested from an entity’s biological assets shall be measured at its fair value less costs to sell at the point of harvest. Such measurement is the cost at that date when applying IAS 2 Inventories or another applicable Standard.

According to IAS 41.24, Cost may sometimes approximate fair value, particularly when: (a) little biological transformation has taken place since initial cost incurrence (for example, for fruit tree seedlings planted immediately prior to the end of a reporting period); or (b) the impact of the biological transformation on price is not expected to be material (for example, for the initial growth in a 30-year pine plantationproduction cycle).

According to IAS 41.6, a gain or loss arising on initial recognition of a biological asset at fair value less costs to sell and from a change in fair value less costs to sell of a biological asset shall be included in profit or loss for the period in which it arises.

According to IAS 41.28, a gain or loss arising on initial recognition of agricultural produce at fair value less costs to sell shall be included in profit or loss for the period in which it arises.

According to IAS 41.7, biological transformation results in the following types of outcomes:
(a) asset changes through (i) growth (an increase in quantity or improvement in quality of an animal or plant), (ii) degeneration (a decrease in the quantity or deterioration in quality of an animal or plant), or (iii) procreation (creation of additional living animals or plants); or (b) production of agricultural produce such as latex, tea leaf, wool, and milk.