ALYA KHAIRA NAZHIFA

1710531009

PSAK 14 (INVENTORY) & PSAK 69 (BIOLOGICAL ASSET)

 Under PSAK 14, inventory is recognised at the lower of cost and net realisable value

(NRV)

 The cost of inventory includes:

- Import duties

- Non-refundable taxes

- Transport and handling cost

- any other directly attributable costs less trade discounts

- Rebates and any other items

 NRV = The estimated selling price in the ordinary course of business - the estimated

costs of completion and estimated selling expenses

 Determination based on individual item-basis: the cost for items that are not

interchangeable or that have been segregated for specific contract

 The cost of other items of inventory used is assigned by using:

- First in, first out (FIFO)

- Weighted average cost formula

- Last in, first out (LIFO) is not permitted

 Formulation for all inventories:

- The entity uses the same cost formula for all inventories that have a similar nature

and use to the entity

- The entity uses different cost formula where inventories have a different nature or

use

- The cost formula used is applied on a consistent basis from period to period

 PSAK 69 is an adoption of the IAS 41, ‘Agriculture’ (revised 2014). Except for bearer

plants, which are in the scope of PSAK 16, all agricultural activity is in the scope of
 PSAK 69. The principle of the standard is that increases in value are recognised as

income as the asset grows and develops.

 Agricultural activity is the management of biological transformation and harvest of

biological assets (living animals and plants) for sale or for conversion into agricultural

produce (harvested product of biological assets) or into additional biological assets.

 A biological asset is a living animal or plant. Produce growing on bearer plants is a

biological asset. Once harvested, agricultural produce becomes inventory and is

accounted for in accordance with PSAK 14, ‘Inventory’.

 Biological assets that meet the definition of ‘Bearer plants’ is measured either at cost

or revalued amounts, less accumulated depreciation and impairment losses under

PSAK 16.

 Measurement:

- All other biological assets, including produce growing on a bearer plants, are

usually measured at fair value less costs to sell, with the change in the carrying

amount reported as part of profit or loss from operating activities.

- Agricultural produce harvested from an entity’s biological assets is measured at

fair value less costs to sell at the point of harvest.

 PSAK 69 requires an entity to recognise a biological asset when:

- The entity controls the asset as a result of past events;

- It is probable that future economic benefits associated with the asset will flow to

the entity; and

- The fair value or cost of the asset can be measured reliably