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Biological Assets Accounting Guide

Biological assets are living plants and animals that are measured initially and subsequently at fair value less costs to sell. Agricultural produce is the harvested product of biological assets that is measured at fair value less costs to sell at the point of harvest. Gain or loss from changes in the fair value of biological assets and agricultural produce are recognized in profit or loss. Government grants related to biological assets measured at fair value less costs to sell are recognized in profit or loss when the grant becomes receivable or conditions are met.

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Jessel Ann Montecillo
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199 views1 page

Biological Assets Accounting Guide

Biological assets are living plants and animals that are measured initially and subsequently at fair value less costs to sell. Agricultural produce is the harvested product of biological assets that is measured at fair value less costs to sell at the point of harvest. Gain or loss from changes in the fair value of biological assets and agricultural produce are recognized in profit or loss. Government grants related to biological assets measured at fair value less costs to sell are recognized in profit or loss when the grant becomes receivable or conditions are met.

Uploaded by

Jessel Ann Montecillo
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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BIOLOGICAL ASSETS

Definition of Terms
Biological assets are living plants and animals. (PAS 41)
Agricultural produce is harvested product of the entity’s biological assets.
Harvest is the detachment of produce from a biological asset or the cessation of a biological asset’s life process.
Agricultural activity or agriculture 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 process of growth, degeneration, production and procreation that cause
qualitative changes in a biological asset.

Measurements

Initial Measurement Subsequent Measurement


Biological Assets Fair value less costs to sell Fair value less costs to sell
Agricultural Produce Fair value less costs to sell at the PAS 2 (Inventories) applies for
point of harvest agricultural produce after point
of harvest

Cost to Sell:
 commissions to brokers and dealers
 levies by regulatory agencies
 commodity exchanges
 transfer taxes and duties
 transport costs
 finance cost
 income taxes
Note: When reasonable assurance exists that fair value can NOT be reliably measured, biological assets are measured at cost less accumulated
depreciation and any accumulated impairment loss.
Gain or Loss from Fair Value Measurement of Biological Asset and Agricultural Produce
a. Gain or loss arising from initial recognition of a biological asset at fair value less costs to sell and any subsequent
changes in fair value costs to sell shall be included in profit or loss.
b. A loss may arise on initial recognition of a biological asset because costs to sell are deducted in determining fair
value costs to sell of a biological asset.
c. A gain may arise on initial recognition of a biological asset. (e.g. when a calf is born)
d. A gain or loss arising from initial recognition of agricultural produce at fair value less costs to sell shall be included
in profit or loss.
e. A gain or loss may arise on initial recognition of agricultural produce as a result of harvesting.

Government Grant Related to Biological Asset


a. An unconditional government grant related to a biological asset that has been measured at fair value less cost to
sell shall be recognized in profit or loss when the grant becomes receivable.
b. If a government grant related to a biological asset measured at fair value less cost to sell is conditional, the grant
shall be recognized in profit or loss only when the conditions attaching to the grant are met.
c. If a government grant relates to a biological asset measured at cost less any accumulated depreciation and any
accumulated impairment losses, PAS 20 on “government grant” is applied.

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