Chapter 6 - Agriculture Flashcards
(16 cards)
Which standard covers agriculture?
IAS 41 / AASB 141
What is the definition of agricultural activity under IAS 41?
The management of biological transformation and harvest of biological assets for sale (or conversion into) agricultural produce or other biological assets
What are examples of agricultural activity?
- Raising livestock
- Forestry
- Cultivating orchards or plantations
What is a biological asset under IAS 41 ?
A living plant or animal
What is agricultural produce?
Harvested produce of an entity’s biological assets
Up to what point does IAS 41 apply?
Applies to agricultural produce up to the point of harvest, after which IAS 2 inventories is applicable
True or false:
IAS 41 applies to agricultural lands.
False.
IAS 16 Property Plant & Equip and IAS 40 Investment Property apply instead.
True or false:
IAS 41 can apply to intangible assets related to agriculture
False.
IAS 38 Intangible assets applies instead.
What is SGARA?
Self-generating and regenerating assets
Are bearer plants covered under IAS 41 Agriculture?
No.
IAS 16 Property Plant & Equipment applies instead.
What 3 conditions should be met to recognise a biological asset or agricultural produce under IAS 41 ?
- the entity controls the asset as a result of past events
- probable that future economic benefits will flow
- fair value or cost can be measured reliably
How should a biological asset initially be measued?
At fair value, less costs to sell
How should a biological asset be subsequently measured?
At fair value. Once measured at fair value the asset cannot subsequently go back to cost.
How should agricultural produce be measured?
At fair value less estimated costs to sell at the point of harvest.
Subsequent measurement then reverts to IAS 2 (inventory).
How should gains or losses on a biological asset be recognised?
Should be reported directly in profit or loss for the period to which they relate.
How should gains or losses on the initial recognition of agricultural produce be treated?
Gains / losses should be included in the profit & loss in the period in which they arise.
This might arise due to harvesting, because the harvested crop may be worth more than the unharvested crop.
