IAS 41 — Agriculture

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OBJECTIVE
FR

The objective of IAS 41 is to establish standards of accounting for agricultural

activity
&

SCOPE
FA

Within scope are Biological assets, Agricultural produce at the point of harvest
and Government grants related to biological assets.
A
C

EXCLUDED FROM SCOPE:

C

• Land related to agricultural activity – covered by IAS 16 Property, Plant and

A

Equipment and IAS 40 Investment Property.

• Intangible assets related to agricultural activity – covered by IAS 38 Intangible
Assets.
• Amendments to IAS 41 (Effective 1 January 2016).
• Bearer plants related to agricultural activity.
• Government grants related to bearer plants.

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 Important Definitions

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AGRICULTURAL ACTIVITY

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Agricultural Activity is the management of Biological transformation of a
BIOLOGICAL ASSET for the purpose of either for
• Sale (Biological Growth)
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• Creating additional biological asset (Reproduction)
• Hervesting (Agricultural produce)
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BIOLOGICAL ASSET
FR

Living plant or animals.

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AGRICULTURAL PRODUCE
FA

Harvested produce from the Biological asset, Egg, Meat - [IAS-2]

A
C
C
A

Biological Transformation Growth

Degeneration

Qualitative Quantitative Reproduction / Procreation

Change in Biological asset Production

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 Biological Asset

Consumable Biological asset Bearer Biological asset

Harvested or Sold as Wishes to harvest Agriculture

Biological asset i.e. wood tree produces from the asset

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Mature
u dy Apple tree, Milk, Meat
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FR

Consumable Bearer
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When we cut down the tree Regular, Hasvesting very season

FA
A
C
C
A

RECOGNITION

Biological assets or agricultural produce are recognised when:

• Entity controls the asset as a result of a past event

• Probable that future economic benefit will flow to the entity; and
• Fair value or cost of the asset can be measurement reliably.

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 MEASUREMENT

• Biological assets within the scope of IAS 41 are measured on initial recognition
and at subsequent reporting dates at fair value less estimated costs to sell,
unless fair value cannot be reliably measured.

• If no reliable measurement of fair value, biological assets are stated at cost

less accumulated depreciation and accumulated impairment losses.

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• Agricultural produce is measured at fair value less estimated costs to sell at
the point of harvest.

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• The gain on initial recognition of biological assets at fair value less costs to

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sell, and changes in fair value less costs to sell of biological assets during a
period, are included in profit or loss.

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• A gain on initial recognition (e.g. as a result of harvesting) of agricultural
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produce at fair value less costs to sell are included in profit or loss for the
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period in which it arises.

FR

• All costs related to biological assets that are measured at fair value are
recognised as expenses when incurred, other than costs to purchase
biological assets.
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• An unconditional government grant related to a biological asset is measured

FA

at fair value less estimated point-of-sale costs is recognised as income when,

and only when, the government grant becomes available.
A

• A conditional government grant, including where a government grant requires

C

an entity not to engage in specified agricultural activity, is recognised as income

C

when and only when, the conditions of the grant are met.
A

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