IAS 41: Agriculture

Question 1

IAS 41 shall be applied to account for the following when they relate to agricultural activity:

Answer 1

(1) Biological Assets (2) Agricultural Produce at the point of harvest (3) Gov’t Grants

Question 2

IAS 41 does not apply to:

Answer 2

(1) Land related to agricultural activity and (2) Intangible Assets related to agri. Activity

Question 3

Agricultural Produce is ___

Answer 3

Harvested product of the entity’s biological assets, only at the point of harvest

Question 4

T/F: IAS 41 deals with the processing of agricultural produce after harvest

Answer 4

False. IAS 41 does not deal with that

Question 5

Agricultural Activity

Answer 5

Management by an entity of the biological transformation and harvest of biological assets for sale or for conversion into agricultural produce or into addt’l biological assets

Question 6

Biological Asset

Answer 6

Living animal/plant

Question 7

Biological Transformation

Answer 7

Processes of growth, degeneration, production, and procreation that cause quali/quantitative changes in a biological asset

Question 8

Harvest

Answer 8

Detachment of produce from a biological asset or the cessation of a biological asset’s life processes

Question 9

Costs to Sell

Answer 9

Incremental costs directly attributable to the disposal of an asset, excluding finance costs and income taxes

Question 10

Common features of Agricultural Activity:

Answer 10

(1) Capability to Change [biological transformation] (2) Management of change [harvesting from unmanged sources such as ocea fishing and deforestation is not agricultural activity] (3) Measurement of change [change in quality or quantity brought about by biological transformation or harvest is measured and monitored]

Question 11

Biological Transformation results in the following types of outcomes:

Answer 11

(1) Asset changes through (a) Growth [improvement in quality and quantity] (b) Degeneration [a decrease in quantity or quality] (c) Procreation [creation of additional living animal or plants] (2) Production of Agricultural Produce

Question 12

Active Market:

Answer 12

(1) items traded within the market are Homogeneous (2) Willing Buyers and Sellers can normally be found at any time (3) Prices are available to the Public

Question 13

Government Grants (From IAS 20)

Answer 13

Assistance by government in the form of transfers of resources to an entity in return for past/future compliance with certain conditions relating to the operating activities of the entity

Question 14

An entity shall Recognize a Biological Asset/Agricultural Produce when and only when:

Answer 14

(1) The entity Controls the asset as a result of past events (2) It is Probable that future econ benefits associated with the asset will flow to the entity and (3) the FV or cost of the asset can be Measured Reliably

Question 15

A Biological Asset shall be measured on Initial Recognition and at the End of each reporting period at ______

Answer 15

FV less costs to sell, except where the FV cannot be measured reliably

Question 16

Agricultural Produce harvested from an entity’s biological assets shall be measured at ____

Answer 16

FV less costs to sell at the point of harvest

Question 17

T/F: The FV of a Biological Asset or Agricultural Produce is adjusted because of the existence of a contract.

Answer 17

False. Even if the price in the contract is different from the FV less costs to sell, the measurement is still at the latter

Question 18

The quoted price in an active market is the appropriate basis for determining the FV of the Biological Asset or Agricultural Produce if:

Answer 18

An active market exists for that Biological Asset or Agri. Produce

Question 19

If an active market does not exist, an entity uses one or more of the ff., when available, in determining FV:

Answer 19

(1) Most recent market transaction price (provided that there has not been a significant change in econ circumstances between the date of that transaction and the end of the reporting period) (2) Market Prices for similar assets with adjustment to reflect differences (3) Sector Benchmarks

Question 20

When market-determined prices or values may not be available for a Biological Asset in its present condition, an entity uses the ____

Answer 20

Present Value of expected net cash flows from the asset discounted at a current market-determined rate in determining FV

Question 21

T/F: An entity does not include any cash flows for financing the assets, taxation, or re-establishing Biological Assets after harvest (such as the cost of replanting trees in a plantation forest after harvest)

Answer 21

True.

Question 22

Cost may sometimes approximate FV when:

Answer 22

(1) Little Biological Transformation has taken place since initial cost incurrence (2) The Impact of the Biological Transformation on price is not expected to be material

Question 23

If there is no market for Biological Assets that are attached to the land but there is an Active Market for the combines assets (biolocial assets, raw land, and land improvements as a package), the entity may use information regarding the combined assets to determine

Answer 23

FV for the biological assets. Ex: FV of the combined assets - FV of raw land and land improvements = FV of Biological Assets

Question 24

Gain or Loss from Initial Recognition of a Biological Asset at FV less costs to sell and from a Change in FV less costs to sell of a biological asset shall be included in ____

Answer 24

Statement of Profit or Loss for the period in which it arises

Question 25

Loss may arise on initial recognition since ___

Answer 25

Costs to sell are deducted in determining FV less costs to sell of a Biological Asset

Question 26

Gain or Loss from Initial Recognition of Agricultural Produce at FV less costs to sell shall be included in ____

Answer 26

Statement of Profit or Loss for the period in which it arises

Question 27

When initial recognition for a Biological Asset for which Market-determined Prices are not available AND for which Alternative Estimates of FV are determined to be clearly Unreliable, that Biological Asset shall be measured at its ____

Answer 27

Cost less any Acc Dep and any Acc Impairment Losses. Once the FV becomes reliably measurable, an entity shall measre it at its FV less costs to sell

Question 28

T/F: Once a non-current Biological Asset meets the criteria to be classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with IFRS 5, it is presumed that FV can be measured reliably

Answer 28

True.

Question 29

T/F: The presumption that FV can be measured reliably for a Biological Asset can be rebutted at any point

Answer 29

False. It can only be rebutted on initial recognition

Question 30

An Unconditional Gov't Grant related to a Biological Asset measured at ____ shall be recognized in _____ only when _____

Answer 30

FV less costs to sell; profit or loss; the gov't grant becomes receivable

Question 31

If a gov't grant related to a Biological Asset measured at its FV less costs to sell is Conditional, inlcuding when a gov't grant requires an entity not to engage in specified agricultural activity, an entity shall recognize the government grant in profit or loss only when ___

Answer 31

The conditions attaching to the gov't grant are met

Question 32

T/F: An entity shall disclose the aggregate Gain/Loss arising during the current period on initial recognition of Biological Assets and Agricultural Produce and from the Change in FV less costs to sell of Biological Assets

Answer 32

True.

Question 33

T/F: An entity shall not provide a description of each group of Biological Assets.

Answer 33

False. The entity shall provide that

Question 34

Quantified Description of each group of Biological Assets distinguising between _____

Answer 34

Consumable and Bearer Biological Assets or between Mature and Immature Biological Assets, and Bearer Biological Assets by group.

Question 35

Consumable Biological Assets:

Answer 35

Those that are to be Harvested as Agri. Produce or Sold as Biological Assets.

Question 36

Bearer Biological Assets

Answer 36

those other than Consumable Biological Assets

Question 37

Mature Biological Assets

Answer 37

Have attained harvestable specifications/able to sustain regular harvests

Question 38

If not disclosed elsewhere in info. Published with the financial statements, an entity shall describe:

Answer 38

(1) Nature of its Activities involving each group of Biological Assets (2) Non-financial measures or Estimates of the Physical Quantities of (a) each group of the entity's Biological Assets at the end of the period (b) Output of Agricultural Produce during the period

Question 39

T/F: An entity need not disclose the methods and significant assumptions in determining the FV of each group of Agri. Produce at the point of harvest and each Group of Biological Assets

Answer 39

False. An entity shall disclose the aforementioned.

Question 40

T/F: An entity shall disclose the FV less costs to sell of Agri Produce harvested during the period, determined at the point of harvest

Answer 40

True.

Question 41

More disclosures:

Answer 41

(1) Existence and Carrying Amounts of Biological Assets whose title is restricted and the carrying amounts of Biological Assets pledged as security for liabilities (2) Amount of Commitments for the development or acquisition of Biological Assets (3) Financial Risk Management Strategies related to agricultural activity

Question 42

Reconciliation of changes in the Carrying Amount of Biological Assets between the Beginning and the End of the current period includes:

Answer 42

(1) Gain/Loss from changes in FV less costs to sell (2) Increases due to Purchases (3) Decreases attributable to Sales and Biological Assets classified as held for sale in accordance with IFRS 5 (4) Decreases due to Harvest (5) Increases resulting from Business Combinations (6) Net Exchange differences arising on the translation of financial statements into a different presentation currency, and on the translation of a foreign operation into the presentation currency of the reporting entity and (7) other changes

Question 43

If an entity measures Biological Assets at FV less any Acc Dep and any Acc Impairment Losses at the end of the period, the entity shall disclose:

Answer 43

(1) Description of the Biological Assets (2) Explanation of why FV can't be measured reliably (3) If possible, range of estimates within which FV is highly likely to lie (4) Depreciation Method used (5) Useful Lives or the Depreciation Rates used (6) Gross Carrying Amount and the Acc Dep (aggregated with Acc Impairment Losses) at the Beginning and End of the period

Question 44

If, during the current period, an entity measures Biological Assets at FV less any Acc Dep and any Acc Impairment Losses the entity shall disclose any Gain or Loss recognized on disposal of such Biological Assets and the Reconciliation Requirements (separately) plus these amounts in the profit or loss related to those Biological Assets:

Answer 44

(1) Impairment Losses (2) Reversals of Impairment Losses (3) Depreciation

Question 45

If FV of Biological Assets previously measured at their Cost less any Acc Dep and any Acc Impariment Losses becomes reliably measurable during the current period, an entity shall disclose for those Biological Assets:

Answer 45

(1) Description of the Biological Assets (2) Explanation of why FV has become reliably measurable (3) Effect of change

Question 46

An entity shall disclose the ff. related to Agri Activity covered by this Standard:

Answer 46

(1) Nature and Extent of Gov't Grans recognized in Financial Statements (2) Unfulfilled Conditions and other contingencies attaching to Gov't Grants (3) Significant Decreases expected in the level of Gov't Grants