BIOLOGICAL ASSETS

INTERMEDIATE ACCOUNTING

BIOLOGICAL ASSET
Living plants or animals
Sheep, trees, plants, dairy cattle, and fruits

AGRICULTURAL PRODUCE
Harvested product of the entity’s biological assets
Wool from sheep, logs from trees, milk from dairy cattle

BEARER PLANT
Under PAS 16, a bearer plant is a living plant that
Used in the production or supply of agricultural
Expected to bear a produce for more than one period
Has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales
PAS 41, states that the following are not bearer plants
Plants cultivated to be harvested as agricultural produce
Plants cultivated to produce agricultural produce when there is more than a remote likelihood
that the entity will also harvest and sell the agricultural produce
Annual crops

AGRICULTURAL ACTIVITY
Management by an entity of the biological transformation and harvest of biological asset for sale
or conversion into agricultural produce or into additional biological asset
Capability to change, arising from biological transformation
Management for change, facilitates biological transformation by enhancing or stabilizing
conditions necessary for the process to take place
Measurement of change, brought about by biological transformation or harvest

BIOLOGICAL TRANSFORMATION AND HARVEST

Biological Transformation
Process of growth, degeneration, production and procreation

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

ACCOUNTING FOR BIOLOGICAL ASSET

Recognise biological asset when the following conditions are met
Enterprise controls the asset as a result of past event
It is probable that the future economic benefits will flow to the entity
Fair value or cost can be measured reliably
Measurement
Fair value less estimated cost to sell
Fair value - price that would be received upon sale of the asset in an orderly transaction in the
principal or most advantageous market
Cost to sell - incremental costs directly attributable to the disposal of an asset, excluding finance
cost and income taxes

MEASUREMENT AFTER INITIAL RECOGNITION

Fair value less cost to sell
When FV is not directly observable, the following may be considered
Most recent market transaction price
Prices for similar assets after adjustment to reflect differences in size, quality or characteristics
Any benchmark within the sector
Any changes in FV-CTS during the reporting period is taken in P/L, PAS 41, encourages
disclosures of changes

Price change - same age, different date

Physical change - same date, different age