IFRS in your pocket |2021

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IFRS in your pocket |2021

IAS 41 Agriculture

Overview Prescribes the accounting for agricultural activity.

Agricultural activity Agricultural activity is the management of the biological

transformation and harvest of biological assets for sale
or for conversion into agricultural produce or into
additional biological assets.

Bearer plants that are used in the production or supply

of agricultural produce and which will not be sold as
agricultural produce are accounted for as PP&E,
applying IAS 16. These include fruit trees and grape
vines.
Measurement All biological assets are measured at fair value less costs
to sell, unless fair value cannot be measured reliably.

Agricultural produce is measured at fair value less costs

to sell at the point of harvest. Because harvested
produce is a marketable commodity, there is no
‘measurement reliability’ exception for produce. Fair
value measurement stops at harvest, after which IAS 2
applies.

Any change in the fair value of biological assets during a

period is reported in profit or loss.
Interpretations None

Changes None
effective this
year

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 IFRS in your pocket |2021

Pending changes In May 2020, the Board issued Annual

Improvements to IFRS Standards 2018-2020. As part of
these annual improvements, the Board removed the
requirement in IAS 41 for entities to exclude cash flows
for taxation when measuring fair value. This aligns the
fair value measurement in IAS 41 with the
requirements of IFRS 13 to use internally consistent
cash flows and discount rates and enables preparers to
determine whether to use pre-tax or post-tax cash
flows and discount rates for the most appropriate fair
value measurement.

The amendment is effective for annual periods

beginning on or after 1 January 2022. Earlier application
is permitted.