onal Review and Training Center

Agriculture
(ToA.204)
L. R. Cabarles

Relevant Standard

PAS 41 Agriculture

PFRS 13 Fair Value Measurement

Scope
Scope of
of PAS
PAS 41
41
Applies to:

Biological assets; and

Agricultural produce at the point of

harvest.

When they relate to agricultural activity

Key Definitions

Biological asset is a living animal or

plant.

Agricultural produce is the harvested

product of the entitys biological
assets.

Harvest is the detachment of produce

from a biological asset or the
cessation of a biological assets life
processes.

Key Definitions

Agricultural activity is the management by

an entity of the biological transformation
and harvest of biological assets for sale, or
for conversion into agricultural produce, or
into additional biological assets.

Biological transformation comprises the

processes of growth, degeneration,
production, and procreation that cause
qualitative or quantitative changes in a
biological asset.

Examples of
Agricultural Activity

Raising livestock
Forestry
Annual or perennial cropping
Cultivating orchards and
plantations
Floriculture
Aquaculture (including fish
farming)

Examples of NOT an
Agricultural Activity
Ocean fishing
Deforestation

Examples
Examples
Biological assets

Agricultural
produce

Processed
produce

Sheep

Wool

Yarn, carpet

Trees in a
plantation forest

Felled trees

Lumber
Logs

Plants

Cotton

Thread, clothing

Harvested cane

Sugar

Dairy cattle

Milk

Cheese

Pigs

Carcass

Sausages, cured
hams

Bushes

Leaf

Tea, cured
tobacco

Vines

Grapes

Wine

Fruit trees

Picked fruit

Processed fruit

Recognition
An entity should recognize a
biological asset or agricultural
produce when, and only when:
the entity controls the asset as a
result of past events;
it is probable that future
economic benefits will flow to
the entity; and
the fair value or cost of the asset
can be measured reliably.

Measurement
Measurement

Biological
Biological Assets
Assets
On initial recognition and at
subsequent reporting dates at
fair value less costs to sell,
unless fair value cannot be
reliably measured.
A gain or loss on initial recognition
at fair value, and changes in fair
value during a period, are
reported in profit or loss.

Measurement
Measurement

Agricultural
Agricultural Produce
Produce
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.
A gain on initial recognition at fair value
should be included in profit or loss for
the period in which it arises.

Measurement
Measurement
Definitions
Definitions
Fair value is the the price that
would be received to sell an
asset in an orderly transaction
between market participants at
the measurement date.

Measurement
Measurement
Definitions
Definitions
Costs to sell are the incremental
costs directly attributable to
the disposal of an asset,
excluding finance costs and
income taxes.

Biological
Biological assets
assets physically
physically
attached
attached to
to Land
Land
Fair value is separately identifiable
Measure biological assets at fair value
less cost-to-sell
Fair value is not separately identifiable
Deduct fair value of other assets to
arrive at the fair value of biological
assets

How
How to
to Determine
Determine Fair
Fair Value?
Value?
The fair value of an asset is based on its
present location and condition.
The fair value of a biological asset is
based on current quoted market
prices and is not adjusted to reflect
the actual price in a binding sale
contract that provides for delivery at
a future date.

Analysis
Analysis of
of increase
increase in
in value
value
Due to price changes
?
(same age; different dates)
Due to physical changes
?
(same date; different ages)

STQ Answers
1.
2.
3.
4.
5.

C
B
C
C
D

STQ Answers
6.
7.
8.
9.
10.

B
B
C
C
D

STQ Answers
11.
12.
13.
14.
15.

B
D
B
B
A

 end of ToA.204