The Fisher Valley College

INTERMEDIATE ACCOUNTING
31-individual term paper - biological assets

Biological assets are coverage of PAS 41 including the agricultural produce at

the point of harvest. Bearer plants are out of scope of PAS 41 (PAS 16).
Government grants are also applied at government grants covered by paragraph 34
and 35.
Pas 41 doesn’t apply to land related to agricultural activity because it is PAS
16; PAS 41. Bearer plants also not related to pas 41 if it’s related to agricultural
activity. Government grants that are relate to bearer plant because it is accounted
for PAS 16. Intangible assets that are related to agricultural activity is also can’t
apply to PAS 41.
Biological asset
Pas 31 define biological asset as any living animal or plant like Cows,
chicken. Living plants that are the trees, vines, crops. Bearer plant is used in the
production of supply of agricultural produce and it is expected to bear produce for
more than one period and has a remote likelihood of being sold as agricultural
produce. Plants that are not bearer plants is 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 plant
as agricultural produce. Agricultural produce is harvested produce of the entity’s
biological assets. Agricultural activity is the management by an entity of the
biological transformation and harvest of biological assets for sale of for conversion
into agricultural produce or into additional biological assets. It is not an
agricultural activity if it is harvest from unmanaged sources (e.g ocean)
Recognition and measurement
The recognition criteria are that 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.
Measurement
Biological assets are measured Initially at fair value less costs to sell. Subsequent
measurement is fair value less costs to sell. When fair value cannot be measured
reliably it is cost less any accumulated depreciation and any accumulated
impairment loss.
Agricultural produce is measured initially at fair value less costs to sell at the point
of harvest (PAS 41). Subsequent measurement is using PAS 2 or Net realizable
value. Another measurement is Point-of-sale costs include broker’s and dealer’s
commissions, any levies by regulatory authorities and commodity exchanges, and
any transfer taxes and duties. The exclude transport and other costs necessary to
get the assets to a market.
In gains or losses, gains or loss on changes in fair value less cost to sell. Also, gain
or loss on initial recognition of agricultural produce, and, gain or loss on initial
recognition of biological asset.
Gains or loss on changes in fair value less cost to sell dues to price change is using
the formula of Fair value less cost to sell at the end of the year but the beginning
age is used MINUS the Fair value less cost to sell at the beginning considering the
age of it at the beginning. If it’s due to physical change, the formula is the fair
value less cost to sell at the end but considering the age at the end as well MINUS
Fair value less cost to sell at the end considering the age at the beginning.