CFAS CHAPTERS 20-22
government, pwedeng galing sa
CHAPTER 20: PAS 38 INTANGIBLES
PAS 38
Applies to all intangible assets except those
that specifically dealt with under other standards
o does not apply to goodwill on
business combination (PFRS 3),
intangible assets held as inventories
(PAS 2), Intangible asset held for sale
(PFRS 5)
INTANGIBLE ASSET
Is an identifiable non-monetary asset
without physical substance.
o Non-monetary - hindi cinaclassify as
monetary asset
o The difference ng ppe and intangible
assets, yung intangbile assets is hindi
nahahawakan or walang physical
substance
Normally refer to intangible resources such
as scientific or technical knowledge, design and
implementation of new processes or systems,
licenses, intellectual property, market knowledge
and trademarks.
Examples include computer software,
patents, copyrights, motion picture films, customer
lists, mortgage servicing rights, fishing licenses,
import quotas, franchise customer or supplier
relationship, customer loyalty, market share and
marketing rights.
ESSENTIAL ELEMENTS OF AN INTANGIBLE ASSET
Identifiability - an asset is identifiable if it either:
Separable; or
○ Separable - it if it is capable of being
sold separated.
Arises from contractual or other contractual
rights
○ Rights may came from contract or
binibigay mismo ng government sayo
○ Pwede rin namang hindi galing sa
ibang party basta may contract (or
meeting of the minds) between
parties, so may law/legality na
between them
Goodwill is outside the scope of pas 38
because it is unidentifiable - means the entity has
the ability to benefit from the intangible
Control
Means the entity has the ability to benefit
from the intangible asset or prevent others from
benefiting from it
○ If you hold the asset, you are the
rightful owner of it, meaning, pag
sayo yung asset, hindi mo siya
pwedeng ipagamit sa iba (unless
iparent mo siya)
Control normally arises from legal rights that
are enforceable in the court of law
○ Normally, employees' skills, specific
managerial or technical talent and
customer relationships, and loyalty
Future economic benefits
o It may include revenue from the sale
of the products, or cost saving
ASSETS WITH BOTH INTANGIBLE AND TANGIBLE
BENEFITS
Some assets may have both intangible and
tangible elements. in determining whether such an
asset is to be accounted for as PPE or an intangible
asset, the entity uses judgment to assess which
element is more significant.
If the intangible component is an integral
part of the asset as a whole, the intangible asset is
treated as PPE. Otherwise, it is treated as separate
intangible asset.
o Example: Computer software na
kailangan sa pagpapaoperate ng
isang computer, is an integral part of
an asset so PPE siya
 o If you cannot separate a certain part
sa related asset niya, treated siya as
PPE
o Yung mga separate na intangible
assets (Ex: Oracle) na hindi vital sa
pag run or operate ng asset, treated
siya as an intangible asset
FINANCIAL STATEMENT PRESENTATION
Intangible assets accounted for under PAS 38
are presented separately from goodwill
Such intangible assets are aggregated and
presented as one line item under the heading
"intangible assets" in the SFP. the breakdown of the
line item is disclosed in the notes
Illustration:
RECOGNITION
An intangible asset is recognized when it meets the
definition of an intangible asset as well as the asset
recognition criteria of "Probable future economic
benefits" and "Reliable measurement of cost".
o Usually yung “probable future
economic benefits” and reliable
measurement of cost” are general
recognition sa isang asset
INITIAL MEASUREMENT
Intangible assets are initially measured at
cost
The measurement of cost depends on how
the intangible asset is acquired. intangible assets
may be acquired through:
Separate acquisition
Acquisition as part of a business combination
Acquisition by way of a government grant
Exchanges of assets
Internal generation
SEPARATE ACQUISITION
The cost of separately acquired intangible
asset comprises:
Purchase price, including import duties and
non- refundable purchase taxes, after deducting
trade discounts and rebates; and
Any directly attributable cost of preparing
the asset for its intended use
If the payment is deferred, the cost is the
cash price equivalent
o Cash price Equivalent - price kung
magkano mo siya bibilhin as of the
moment
o Deferred - babayaran mo in
installment
o Yung difference between them is
recognized as interest over the
period of credit
ACQUISITION AS PART OF A BUSINESS
COMBINATION
The cost of an intangible asset acquired in a
business combination is its fair value at the
acquisition date
The acquirer recognizes an intangible asset
at the acquisition date, separate from goodwill,
whether or not the intangible asset had been
recognized by the acquiree before the business
combination
ACQUISITION BY WAY OF A GOVERNMENT GRANT
Intangible asset acquired by way of
government grant may be initially measured either:
At fair value; or Carrying amount of the Asset given up
Alternatively, at nominal amount plus direct
costs incurred in preparing the asset for its
intended use
EXCHANGES OF ASSETS
An intangible asset may be acquired in
exchange for another monetary asset. the
measurement of an intangible asset acquired If Cost Model
depends on whether the exchange transaction has
commercial substance or not
With commercial substance - An exchange
has a commercial substance if the entity's
subsequent cash flows are expected to
change as a result of the exchange. the
intangible asset received is measured using
INTERNALLY GENERATED INTANGIBLE ASSETS
the following order of priority:
○ Fair value of the asset given up To determine whether an internally
○ Fair value of the asset received; or generated intangible asset meets the recognition
○ Carrying amount of the asset given criteria, its generation is classified into:
up
Research phase
Lacks commercial substance - the intangible
Development phase
asset received is measured at the carrying
○ Ikaw mismo nagdevelop ng
amount of the asset given up
intangible asset
Illustration: ○ Example: publishing house. You are
hiring authors to make stories for
Fair Value of the Asset Given Up
you. Yung stories mismo is a part of
your copyright. So, internally
generated siya kasi hindi mo
kinailangan ng ibang party para
makakuha ka nung copyright na yon
RESEARCH PHASE
Is original and planned investigation
undertaken with the prospect of gaining new
Fair Value of the Asset Received
scientific or technical knowledge and understanding
 Costs incurred during this phase are
expensed outright
o Hindi mo pa naman kasi sure na yung
intangible asset na ginegenerate mo
during research phase will
have/produce economic benefit
DEVELOPMENT PHASE
Is the application of research findings or
other knowledge to a plan or design for the
production of new or substantially improved
materials, devices, products, processes, systems or
services before the start of commercial production
or use
Costs incurred during the development
phase are capitalized if the entity can demonstrate
all of the following:
Technical feasibility of completing the
intangible asset
Intention to complete the intangible asset
Ability to use or sell the intangible asset
Probable future economic benefits
Availability of adequate resources needed to
complete the development;
Reliable measurement of the cost of the
intangible asset
RULES
If it is not clear whether an expenditure is a
research or a development cost, it is treated as a
research cost
Internally generated brands, mastheads,
publishing titles, customer lists and similar items are
not recognized as intangible assets. similarly, an
internally generated goodwill is not recognized as an
asset. the costs to develop these items, including
subsequent expenditures on them are expensed
o Yung cost kasi nito is constantly
changing or hindi quantifiable
Research costs and development costs that
do not qualify for capitalization are expensed and
disclosed as "research and development expense"
o Yung mga hindi nagqualify for
capitalization are expensed outright
COST OF AN INTERNALLY GENERATED INTANGIBLE
ASSET
Includes all directly attributable costs
necessary to create, produce, and prepare the asset
for its intended purpose, as from the date the
recognition criteria and the conditions for
capitalization of development costs have been met
Organizational costs (start-up costs) are
costs incurred in establishing a new business. these
are expensed when incurred
Subsequent expenditures - capitalization of
costs ceases when the intangible assets is in the
condition necessary for it capable of operating in a
manner intended by the management
o Examples: Licenses, Registration ng
BIR, Costs to operate
o Capitalization ceases kapag nasa
manner intended by the
management na yung intangible
asset. Costs incurred during this time,
expensed outright na
SUBSEQUENT MEASUREMENT
After initial recognition, an entity chooses
either the cost model or revaluation model as its
accounting policy and
Applies that policy to an entire class of
intangible assets when revaluing an intangible asset,
an entity determines the fair value by reference to
an active market. accordingly, revaluation model is
used only if there is an active market
COST MODEL
The intangible asset is carried at its cost less
any accumulated amortization and any
accumulated impairment losses
REVALUATION MODEL
The intangible asset carried is at its fair value
at the date of the revaluation less any subsequent
accumulated depreciation and subsequent
accumulated impairment losses.
USEFUL LIFE
An entity shall assess whether the intangible
asset has:
Finite useful life
Indefinite useful life
Only intangible assets with finite useful life
are amortized. intangible assets with indefinite
useful life are not amortized but tested for
impairment at least annually using PAS 36
o Yung may finite useful life lang ang
inaamortized, yung may indefinite
useful life ay tinetest lang for
impairment annually
An intangible asset's useful life is indefinite if
there are no legal, contractual, competitive and
other restrictions that would limit the period over
which the asset is used
o Mahaba yung useful life niya and
pwede mo irenew without
restrictions kaya nagkakaroon ng
indefinite life
An intangible asset that has a legal life that
can be renewed for an indefinite number of
renewals without restriction and only for an
insignificant cost is also considered an intangible
asset with indefinite useful life
AMORTIZATION
Is the systematic allocation of the
depreciable amount of an intangible asset over its
useful life
o Para rin siyang depreciation ng PPE,
but specific siya sa intangible assets
The depreciable amount of an intangible
asset with a finite useful life is amortized over the
shorter of its useful life and legal life, if any
Amortization starts when the asset is
available for use, in the manner intended by the
management
Amortization stops when the asset is
derecognized, classified as held for sale under PFRS
5, or becomes fully depreciated
o If the intangible asset is temporarily
idle, doesn’t mean na ihihinto na
yung amortization
Amortization does not cease when the asset
is no longer used, unless one of the conditions above
are met
Amortization is recognized as expense unless
it is included in the cost of producing another asset
o If the intangible asset is necessary for
you to produce an asset (ex:
inventory), magiging part siya ng cost
of inventory
AMORTIZATION METHOD
There are variety of amortization methods,
however, pas 38 does not prescribe any specific
method. the choice of depreciation method
depends on the management judgement
PAS 38 requires management to choose the
method that best reflects the expected pattern of
consumption of future economic benefits embodied
in the asset
o Some would actually use sum of the
year or double declining kasi may
certain items na mas mataas talaga
yung depreciation nila sa unang years
compared sa mga susunod na taon
PAS 38 prohibits the use of an amortization
that is based on revenue
o Same with PPE
An intangible asset's salvage value is
assumed to be zero unless the entity can
demonstrate its ability to sell the intangible asset
before the end of its economic life.
 o Unless otherwise stated, salvage
value is assumed to be zero
o Usually kasi yung intangible assets
after 50 years or so, wala talagang
salvage value kapag binenta na.
Nagkakaroon lang ng salvage value if
napatunayan ng business na
mabebenta pa siya after a long
period of time
PAS 38 requires annual review of the
amortization method and the assessments and
estimates of useful life and residual value at each
year-end. any change is accounted for as a change
in accounting estimate .
o Every year, amortization method,
useful life, and residual value are
being assessed if nagrereflect pa rin
sila sa pattern ng future economic
benefit and if yung value is still
applicable
Intangible assets are tested for impairment
using PAS 36
Illustration:
On January 1, 20x1, Entity A purchases a
patent from Entity B for P300,000. Entity B, the
original owner, has held the patent for 5 years Entity
A estimates that the patent has a remaining useful
life of 16 years
The annual amortization expense
computed as follows
● 15 years ang pipiliin since it is shorter
than 16 years kasi dapat amortized
siya sa shorter of its useful life and
legal life
● 300,000/15 = 20,000
DERECOGNITION
An intangible asset is derecognized when it
is disposed of or when no future economic benefits
are expected from it
On derecognition, the difference between
the carrying amount and the net disposal proceeds,
if any, is recognized as gain or loss in profit or loss
DISCLOSURES (refer nalang sa book ni millan)
CHAPTER 21: PAS 40 INVESTMENT PROPERTY
INVESTMENT PROPERTY
Is land and/or building held to earn rentals
or for capital appreciation or both
o Pag held to earn rentals or for capital
appreciation na land and building ang
included as investment property
Investment property includes only land and
building, it does not include any other type of assets
Investment property generates its own cash
flows independently from other assets of an entity
and is not:
Owner-occupied property (ie., held for use
in the production of supply of goods or
services or for administrative purposes). This
is
is classified as PPE
○ Gamit siya in producing goods or
services
○ Part of the recognition ng PPE is that
it is held for the daily operations ng
company. Meaning, ginagamit siya
for the production of goods, etc.
○ Investment property is an asset
which is not mainly used for
production or for your day-to-day
activities
○ May mga entity kasing nag aacquire
lang ng assets para iutilize nila yung
cash nila
 Held for sale in the ordinary course of Right-of-use asset relating to a building held by the
business (inventory) entity and leased out under an operating lease
○ Yung nature ng business is to acquire 1,200,000
and sell land and buildings
Illustration (Right of use asset relating to a
○ Example: Inventory ng Developers.
building)
Meaning, yung houses or land or
condo units are held ng businesses
for sale or as part ng inventory
Classified as "held for sale" under PFRS 5
○ Management in not intending to hold
the asset or to use it for production
○ In the short term, balak na nilang
ibenta yung certain land/building na
yon
PARTLY INVESTMENT PROPERTY AND PARTLY If finance lease (hindi nagrerecognize ng
OWNER-OCCUPIED ROU, kundi yung PPE itself)

Equipment leased out under an operating lease

Land held for Long-term Capital Appreciation
1,000,000 TOTAL INVESTMENT PROPERTY: 3,700,000

Land held for a currently undetermined future use PARTLY INVESTMENT PROPERTY AND PARTLY
700,000 OWNER-OCCUPIED

Land held for future plant site (Part of PPE)
Land held for sale in the ordinary course of the
business (Inventory)
Building leased out under finance lease (Held for
sale)
If the portions could be sold separately (or
leased out separately under finance lease), they are
accounted for separately. The portion being rented
out under operating lease is classified as investment
property while the owner-occupied portion is
classified as PPE

Building leased out under operating lease 800,000 Illustration:

o For rental kasi siya

o Walang agreement na pwedeng
bilhin yung building after a few years

o Building A: leased out (for rent)
o Building B: for operations (PPE)
o If these two buildings can be sold
separately, Building A is accounted as
Investment Property while yung B is
as PPE
If the portions could not be sold separately,
the entire property is classified as investment
property if the owner-occupied portion is
insignificant. If the owner-occupied portion is
significant, the entire property is classified as PPE
o In this case, the company should
assess ano ba yung major portion ng
building
Illustration:
o Since significant yung being leased
out, meaning investment property
siya since majority ng portions ng
building is used for rentals
o This occurs pag hindi pwedeng ibenta
separately yung building na yon
ANCILLARY SERVICES TO OCCUPANTS
When ancillary services are provided to the
occupants of a property held, the property is
classified as investment property if the services are
insignificant to the arrangement as a whole
o Example sa book: kapag yung isang
corporation is naglelease out siya
and at the same time nag ooffer ng
security services (may mga guards
and such), those are ancillary or hindi
naman siya major services
o In that case, yung ancillary services,
are only recognized sa P/L ng entity,
but the property itself is still
classified as investment property
If the services provided are significant, the
entire property is classified as PPE
INVESTMENT PROPERTY IN CONSOLIDATED
FINANCIAL STATEMENTS
A property that is leased by a member of a
group to another member (parent or subsidiary)
does not qualify as investment property in the
consolidated financial statements because, from the
group's perspective, the property is owner-
occupied
However, the property is classified as
investment property in the lessor/owner's
individual financial statements
o Sa consolidated FS, transactions of
related parties are eliminated. In this
case, ang nagpaparenta is either si
parent/subsidiary, and yung
nagrerenta is also either si
parent/subsidiary.
o In that case, yung lease contact is
between related parties
o Eliminated ang related party
transactions kasi they are treated as
one
o Ngayon, if you are preparing the FS of
either the subsidiary or the parent,
then you should recognize yung
property as an investment property
RECOGNITION
An investment property is recognized when
it meets the definition of an investment property as
well as asset recognition criteria of "probable future
economic benefits" and "reliable measurement of
cost"
o Basic definition: either land or
building, held for rent or for capital
appreciation
o Also, yung asset recognition in
general
An investment property is initially
recognized at cost. The measurement of cost
depends on the mode of acquisition
ACQUISITION BY PURCHASE
The cost of a purchased investment property
comprises the purchase price and any directly
attributable costs incurred in bringing the asset to its
intended condition
If the payment is deferred, the cost is the
cash price equivalent
EXCHANGES OF ASSETS
The measurement of an investment
property acquired in exchange for another non-
monetary asset depends on whether the exchange
transaction has commercial substance or not
With commercial substance - An exchange
has a commercial substance if the entity's
subsequent cash flows are expected to change as a
result of the exchange. the asset received is
measured using the following order of priority:
Fair value of the asset given up
Fair value of the asset received
Carrying amount of the asset given
up
Lacks commercial substance - The asset
given received is measured at the carrying amount
of the asset given up
SUBSEQUENT MEASUREMENT
After initial recognition, an entity chooses
either b the cost model or the fair value model as its
accounting policy and applies that policy to all of its
investment property
o This one is actually same with PPE
and intangible assets
Only one model shall be used except in
circumstances when the fair value of an asset can't
be determined on initial recognition
o There are some instances wherein
upon initial recognition, yung fair
value of an asset is not readily
identifiable
o In those cases, allowed ng standard
na yung certain asset/s na yon ay
walang fair value, so you could
recognize them at cost, then if once
their fair value became
determinable, pwede mo na silang
ivalue at its fair value
PAS 40 requires an entity to determine the
fair value of its investment property, regardless of
the accounting policy used. Under the fair value
model, fair value is used for measurement purposes
while under the cost model, fair value is used for
disclosure purposes
o Under the fair value model, you are
required to know their fair value for
valuation. Kasi at the end of the
reporting period, nirerevalue mo
yung investment property at its fair
value. At the end of every accounting
period you are required to revalue
that certain asset, meaning, may
changes in composition sa asset mo
because of the change in fair value
o However, kapag naman pinili mo
yung cost model, the standard
requires you to determine the fair
value of that specific investment
property only for disclosure
purposes. You will only disclose it,
 but hindi mo irerevalue yung
investment property at its fair value
An entity may subsequently change its
accounting policy from the cost model to the fair
value model, subject to provisions of PAS 8.
However, PAS 40 states that it is highly unlikely that
a change from the fair value model to the cost
model will result in a more relevant presentation
o PAS 8: change in accounting estimate
(cost model to fair value model)
o Napansin mo na yung cost model is
no longer relevant kasi sobrang
tumaas yung fair value ng asset so
inaallow na magchange from cost
model to fair value model
o However, sabi ng standard, highly
unlikely na magreresult ng more
relevant presentation pag nagswitch
from fair value model into cost model
o Usually, magcchange lang ang isang
entity from fair value model to cost
model kapag bumaba yung value ng
asset
COST MODEL
An entity that chooses the cost model shall
measure the investment property using the cost
model under PAS 16 (PPE)
o You will not recognize the change in
fair value ng asset mo, stick ka lang sa
cost
FAIR VALUE MODEL
Under the fair value model, an investment
property is subsequently measured at its fair value
at the end of each reporting period
Gains or losses arising from changes in fair
value are recognized in profit or loss
Assets measured under fair value model are
not depreciated
To avoid double counting, assets and
liabilities that are integral part of the investment
property are not recognized separately
o If you will notice, the difference
between the recognition of PPE and
recognition of investment property
under fair value model, is the mode
of recognizing the gain and losses
arising from the changes in fair value
o Kasi, if investment property, changes
in fair value is recognize in P/L:
meaning, magkakaroon ka ng
gain/loss in change of fair value in the
investment property
o While sa PPE, yung revaluation
surplus is not actually a part of P/L,
rather part siya ng OCI (Impairment
Loss pag decrease)
TRANSFERS
Transfers to or from investment property are
made only when there is a change in use, as
evidenced by the following:
o Mga instance na to ay nangyayari pag
nagkaroon ng change in purpose on
the item itself
Commencement of owner-occupation, for a
transfer from investment property to ppe;
o Example: yung building dati for rental
purposes ngayon ginagamit mo na
siya lahat for operating purposes
End of owner-occupation, for a transfer from
ppe to investment property:
o So kung dati ginagamit mo for
production, since nagstop yung
production mo ginamit mo nalang for
rentals
Commencement of an operating lease to
another party, for a transfer from inventories
to investment property;
o Example: previously you are holding
this particular building as your
inventory, however, biglang nag flop
 yung building, so pinarenta mo
nalang siya
Commencement of development with a view
to sale, for a transfer from investment
property to inventories
o Example: you have a building na
nirerentahan as a corporation tas
nagdecide kayong gawing real estate
yung business. So yung building na
hawak niyo is already your
inventories
If the entity uses the cost model, transfers
between investment property, ppe and inventories
are accounted for at the carrying amount of the
asset transferred. No gain or loss to be recognized
o Whatever is the carrying amount of
your asset sa transfer, yun yung
amount na irerecognize mo dun sa
asset na yon
Illustration:
If the entity uses the fair value model,
transfers between investment property, ppe and
inventories are accounted for at the asset's fair
value at the date of change in use, and:
For transfers from investment property to
ppe or inventories, the entity applies PAS 40
until the date of transfer. Accordingly, the
entity recognizes the change in fair value on
that date as unrealized gain or loss on profit
or loss, just as it would if the investment
property is remeasured to fair value at the
end of the period. The asset's fair value at
the date of the transfer becomes its deemed
cost for subsequent accounting using PAS
16, PFRS 16 OR PAS 2
Illustration:
For a transfer from PPE to investment
property, the entity applies PAS 16 until the
date of the transfer. Accordingly, the entity
recognizes any depreciation on the asset
until that date any difference between the
fair value and carrying amount is recognized
in other comprehensive income as an
adjustment to the asset's revaluation
surplus, except if the difference represents
impairment loss or reversal thereof
o If it’s a transfer naman between PPE
to investment property, you need to
revalue first your PPE (either
recognize reval surplus or
impairment loss)
o In that case, yung magiging value
ngayon ng investment property mo
ay yung fair value ng PPE mo at
measurement date
For transfer from inventories to investment
property, the difference between the fair
value on the date of transfer and the
previous carrying amount is recognized in
profit or loss
DERECOGNITION
An investment property is derecognized
when it is disposed of or when no future economic
benefits are expected from it
o Meaning, your investment property
is no longer serving its purpose, or
fully depreciated na, derecognized
na
 On derecognition, the difference between investment property then the investment
the carrying amount and the net disposal proceeds, property's fair value is subsequently
if any, is recognized as gain or loss in profit or loss revalued
SELF-CONSTRUCTED INVESTMENT PROPERTY IMPAIRMENT
The initial cost of a self-constructed An investment property that is subsequently
investment property includes all directly measured cost model is tested for impairment using
attributable costs of constructing and preparing the PAS 36
property for its intended use, such as materials,
o Same with PPE rin naman and
labor and overhead.
intangibles
The cost excludes abnormal amounts of
There is no separate accounting for
wasted material, labor and other resources incurred
impairment losses for investment property
in constructing or developing the property
measured under the fair value because as any
SUBSEQUENT EXPENDITURES increase or decrease in fair value is simply
recognized gain or loss in profit or loss
Subsequent expenditures on recognized
investment property are generally expensed, unless o Under the fair value, walang separate
they clearly meet the recognition criteria accounting for impairment
o This is a major difference between
o Usually, these expenses relates sa
PPE and investment property
maintenance expenses ng
o Kasi nga kay investment property,
investment property itself
hindi ka naman nagrerecognize ng
o So they are no longer contribute sa
reval surplus at impairment losses.
pagpapatagal ng useful life ng
Nirerecognize mo lang siya as a
property, instead for daily
whole in your P/L or OCI
maintenance lang
o Example: naglilinis ng hallways. Illustration: (If PPE)
Usually, yung costs niyan are
recognized as expense and in your
profit or loss
o Also same sa renewal expenses ng
buildings
o These costs are part of your expenses
PAS 40 states an instance where a
subsequent expenditure is capitalized, which is the
replacement of parts of an investment property
replacements are accounted for as follows:
If Investment Property
Under the cost model, the cost of the
replacement part is capitalized to the
investment property if it meets the
recognition criteria, while the replaced part
is derecognized and charged a loss
Under the fair value model, the cost of the
replacement part (new part) is capitalized to

Any compensation from a third party for an
investment property that is impaired, lost or given
up is recognized in profit or loss when the
compensation becomes receivable
DISCLOSURES
● SAME BASAHIN NA LANG DAW SABI NI
MA’AM :>
CHAPTER 22: PAS 41 AGRICULTURE
AGRICULTURE
Means farming or the process of producing
crops and raising livestock
PAS 41 prescribes the accounting and
disclosures for agricultural and related activity
PAS 41 applies to the following when they
relate to agricultural activity:
Biological assets, except bearer plants;
o Bearer Plants – plants which produce
agri produce and are projected to live
more than a year. Yung intended use
kasi nila is like PPE
Agricultural produce at the point of harvest;
o Subsequent recognizition: PAS 2
(inventories)
Unconditional government grants related to
a biological asset measured at its fair value
less cost to sell
PAS 41 DOES NOT APPLY TO THE FOLLOWING:
Land related to agricultural activity (pas 16
and pas 40)
Bearer plants (PAS 16). However, PAS 41
applies to the produce on those bearer
plants
Government grants related to bearer plants
(PAS 20)
Intangible assets related to agricultural
activity (PAS 38)
PAS 41 applies to agricultural produce only
at the point of harvest. After harvest, PAS 2
inventories or other applicable standard is applied
BIOLOGICAL ASSETS CAN BE EITHER:
CONSUMABLE ASSETS - Those that are to be
harvested as agricultural produce or sold as
biological assets.
o Basically, living animals are a part of
biological asset
o Lahat ng animals (basta related sa
agricultural activity) ay accounted for
PAS 41
o Being consumed
Examples:
livestock intended for the production of
meat
livestock held for sale fish in farms
crops such as maize and wheat
produce on a bearer plant
trees being grown for lumber
Bearer biological assets- those that are held
to bear produce or sold as biological asset remains.
o Nagpoproduce ng agricultural
produce
Examples:
Livestock from which milk is produced fruit
trees from which
Fruit treee from which fruit is harvested
Living animals, weather consumable or
bearer are classified as biological assets if they
relate to agricultural activity however, living plants
are classified as biological assets only if they are
consumable. Bearer plants are classified as PPE
BEARER PLANT
Nature of asset Type of asset
Is a living plant that:
Living animal or plant Biological asset (PAS
Is used in the production or supply of 41) However, bearer
agricultural produce plants are classified as
Is expected to bear produce for more than PPE (PAS 16)
one period
Unprocessed harvested Agricultural produce
Has a remote likelihood of being sold as produce (PAS 41)
agricultural produce, except for incidental
scrap sales Processed product Inventory (PAS 2)

Items Applicable Standard

AGRICULTURAL ACTIVITY
Bearer and PAS 41
Consumable animals Is the management by an entity of the
biological transformation and harvest of biological
Consumbale plants PAS 41 assets for sale or for conversion into agricultural
produce or into additional biological assets
Bearer plants PAS 16
Biological assets and agricultural produce
Produce growing on PAS 41
are accounted for under pas 41 only when they
bearer plants
relate to agricultural activity
o Hindi porket namulot ka lang ng puno
AGRICULTURAL PRODUCE ay agricultural activity na siya. Dapat
Is the harvested produce of the entity's meron kang controlled environment
biological assets wherein finafacilitate mo yung
biological transformation or
o Examples: Fruit conditions necessary for the
Harvest is the detachment of produce from biological transformation to take
a biological asset or the cessation of a biological place
asset's life processes COMMON FEATURES OF AGRICULTURAL
o Either tatanggalin mo yung bunga sa ACTIVITIES
puno or kapag nanganak yung cow or Capability to change
kapag naggatas ka ng baka o Living plants or animals are capable
o Kasama yung pagkatay sa mga hayup of transformation
Agricultural produce refers to those that are Management of change
in their natural state and are not yet processed. Measurement of change
Those that are already subjected to processing are o Change in the quality or quantity
treated as inventories
BIOLOGICAL TRANSFORMATION
o Example: Apple. Kapag tinnaggal mo
siya from the tree, PAS 41 na siya. Comprises the following processes that
Pero kapag ipprocess mo na siya, PAS cause qualitative or quantitative changes in
2 na siya biological asset:
Asset changes through:
 Growth
Procreation
Degeneration
Production of agricultural produce
RECOGNITION
A biological asset or agricultural produce is
recognized when it meets the asset recognition
criteria, including the reliable measurement of its
fair value or cost
Expected to produce economic benefit in the
future
MEASUREMENT
Biological assets are initially and
subsequently measured at fair value less costs to
sell
The gain or loss arising from initial
measurement and subsequent changes in fair value
less costs to sell are recognized in profit or loss
Biological assets whose fair value cannot be
reliably determined on initial recognition are initially
measured at cost and subsequently measured at
cost less accumulated depreciation and
accumulated impairment losses. once the fair value
becomes reliably measurable, the biological asset is
measured at its fair value less costs to sell
o If the fair value is not readily
available, then, you are allowed to
measure you bioassets at cost
Agricultural produce is, in all cases, initially
measured at fair value less costs to sell at the point
of harvest. This will be deemed cost for subsequent
accounting for pas 2 or another applicable standard.
The gain or loss arising from the initial measurement
is recognized in profit or loss
An entity uses PFRS 13 fair value
measurement when measuring the fair value of
biological assets and agricultural produce
Biological assets attached to land (e.g.,
trees in a plantation forest) may not have a separate
market but an active market may exist for the
combined assets (i.e., biological assets, raw land,
and land improvements) as a package. In such case,
the fair value of the raw land and land
improvements may be deducted from the fair value
of the combined assets to arrive at the fair value of
the biological assets
o May mga bioassets na attached to
land. Remember, na yung land ay
hindi accounted for PAS 41
o In these cases, yung fair value ng
bioassets can be determined by
deducting yung fair value ng land
from the fair value ng plantation
forest
Illustration:
GOVERNMENT GRANTS
Only grants that are related to biological
assets measured at fair value less costs to sell are
accounted for under PAS 41. Those that are related
to biological assets measured at cost less
accumulated depreciation and accumulated
impairment losses are accounted for under PAS 20
Under PAS 41, if the government grant is:
Unconditional - the grant is recognized in
profit or loss when it becomes receivable
Conditional - the grant is recognized in profit
or loss when the attached conditions are met
Conditional but the terms of the grant allow
part of it to be retained according to the time
that has elapsed
DISCLOSURES
● SAME BASAHIN NA LANG DAW SABI NI
MA’AM :>