CHAPTER 12

BIOLOGICAL ASSETS

PAS 41 Agriculture shall be applied to account for the following when they relate to agricultural activity
A. Biological assets
B. Agricultural produce
C. Government grant related to a biological assets

APPLIED TO AGRICULTURAL PRODUCE AT THE POINT OF HARVEST.

BIOLOGICAL ASSETS are living animals and living plants

AGRICULTURAL PRODUCE is the harvested product of an entity’s biological assets
HARVEST is the detachment of produce from a biological asset or the cessation of a biological asset’s life
processes.

EXAMPLES
BIOLOGICAL ASSETS (PAS 41) AGRICULTURAL PRODUCE(PAS PRODUCT AFTER HARVEST(PAS
41) 2)
Sheep Wool Yarn, carpet
Trees on plantation forest Felled trees Logs, lumber
Plant Harvested cane Sugar
Dairy cattle Milk Cheese
Pigs Carcass Sausage, cured ham
Bushes Leaf Tea, cured tobacco
Vines Grapes Wine
Fruit trees Picked fruit Processed fruit

AGRICULTURAL ACTIVITY:
1. Raising livestock
2. Annual or perennial cropping
3. Cultivating orchards and plantations
4. Floriculture
5. Aquaculture, including fish farming

FEATURES OF AGRICULTURAL ACTIVITY

1. Capability to change (biological transformation)
2. Management of change (managed to facilitate the biological transformation by enhancing or at
least stabilizing conditions necessary for the process to take place)
3. Measurement change (change in quality or quantity about by biological transformation or
harvest)
BIOLOGICAL TRANSFORMATION comprises the processes of growth, degeneration, production and
procreation that cause qualitative and quantitative changes in biological assets.

TYPE OF OUTCOMES OF BIOLOGICAL TRANSFORMATION

1. Assets changes through (growth , degeneration, and procreation)
2. Production of agricultural produce

RECOGNITION
A. Entity controls the assets of past events
B. Probable that future economic benefits associated with the asset will flow to the entity
C. Fair value or cost of the assets can be measured reliably

MEASUREMENT
BIOLOGICAL ASSET - AT FAIR VALUE LESS COSTS TO SELL; if not determinable or unreliable, it
shall be measured at cost less accumulated depreciation and any impairment loss.

AGRICULTURAL PRODUCE – at fair value less cost to sell at the point of harvest. After agricultural
produce, pas 2 shall apply which is lower of cost and net realizable value.

COST TO SELL – incremental costs directly attributable to the disposal of an asset. Ex.
Commission of brokers and dealers levies by regulatory agencies and commodity exchanges, and
transfer taxes and duties. Exclude transport cost, finance cost and income taxes.

FAIR VALUE INCLUDES THE FOLLOWING UNDER PAS 41:

A. Quoted price
B. Recent market transaction price