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Biological Assets are assets that are living – for example, trees, animals, or
cannabis. The balance sheet breaks down a company’s assets at a given point
in time, classifying them by type and attributing a value to them. The
International Accounting Standard 41 (IAS 41) states that a biological asset is
any living plant or animal owned by the business, and they are typically
measured at fair value minus selling costs.
For example, livestock such as goats, cows, sheep, pigs, and fish are all
considered biological assets. Biological assets also include crops grown by
farmers – e.g., corn, tomatoes – as well as grapevines, cannabis, trees, and any
produce coming from trees, such as apples.
Cannabis Stocks
Canopy Growth Corporation Statement of Financial Position
Other Industries that are known for large amounts of biological assets are:
Biological assets can be held and accounted for by any business owner.
However, because of their nature, they are, typically, of the utmost importance
to farmers or any individuals whose primary source of profit comes from
growing, selling, and shipping such goods.
Biological assets, because they are living or have an active component that
makes them difficult to maintain, are constantly under the threat of change,
both qualitatively and quantitatively. It simply means that plants, animals, and
the living things they produce (such as hens producing eggs or cows
producing milk) have a period of time where they must grow or be produced,
a useful period during which they can be harvested, and a limited amount of
time during which they can be moved and sold before they rot, decay, or
otherwise become useless to consumers.