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Topic 4 - Mfrs 141 Agriculture - Notes - by Yusnaliza Hamid & Noor Saatila (Uitm Perak) Edited 3.6.2020
Topic 4 - Mfrs 141 Agriculture - Notes - by Yusnaliza Hamid & Noor Saatila (Uitm Perak) Edited 3.6.2020
Topic 4
Agriculture-Biological Assets
(MFRS 141: AGRICULTURE)
PREPARED BY:
YUSNALIZA HAMID
NOOR SAATILA MOHD ISA
UiTM PERAK
Jun 2020
By the end of this topic, students
should have the ability to:
• Define Agriculture-biological assets.
• Discuss the initial measurement of agriculture-
biological assets.
2 TOPIC • Discuss the subsequent measurement of
OUTCOME agriculture-biological assets.
(TO) • Prepare the relevant accounting entries and
disclosure in the statement of profit or loss and
other comprehensive income and statement of
financial position
SALE
BIOLOGICAL
TRANSFORMATION
What is AGRICULTURAL and
ACTIVITY? conversion into
AGRICULTURAL
The management by an HARVEST of PRODUCE
entity (managed BIOLOGICAL ASSET
activity)of for
conversion
into
ADDITIONAL
BIOLOGICAL
ASSETS
Yusnaliza & Noor Saatila - UiTM Perak
5 AGRICULTURE-RELATED DEFINITIONS
It is the management by an entity of the
biological transformation and harvest of
Agricultural activity biological assets for SALE, into
AGRICULTURAL PRODUCE, or into
ADDITIONAL BIOLOGICAL ASSETS.
The tea leaves on the tea bush, yet On plucking (harvesting), the green
to be plucked as of a reporting date leaves plucked would be the
are biological assets as it is still agricultural produce
attached to the tea bush.
Yusnaliza & Noor Saatila - UiTM Perak
HARVEST
It is the detachment of produce from a biological asset (e.g., when
dairy cattle is milked and mangos are plucked) or cessation of a
biological asset’s life process (e.g., when cow is slaughtered) .
20
Yusnaliza & Noor Saatila - UiTM Perak
Biological assets Agricultural Produce Products that are
(a living animal or plant) (the harvested product of the the result of
21 entity’s biological assets)
processing after
harvest
Distinction between
Biological assets,
Agricultural Produce and
Products that are the
result of processing after
harvest (as per MFRS
141)
iii Tractor Tractor can be recognized as an item of PPE according to MFRS116 because
it used in production of goods and services (involves in pond management)
iv Acquired patent Acquired patent can be recognized as Intangible Asset according to MFRS138
because it is an identifiable non monetary long term asset without physical
substance and it is involves in pond management.
v Durian trees Durian trees are living plants, can be recognized as PPE according to MFRS116
as it is bearer plant used in the production or supply of agricultural produce.
Durian trees are expected to bear durian fruits (agricultural produce) for more
than one year
In general MFRS
141 assumes Where the fair value cannot be measured
reliably initially, as there is no ACTIVE MARKET,
that FAIR VALUE
the asset is measured at COST less any
in an active accumulated depreciation less any impairment
market can be losses
measured
reliably
Yusnaliza & Noor Saatila - UiTM Perak
28
MEASUREMENT
AGRICULTURAL PRODUCE
INITIALLY MEASURED at its fair value less estimated costs to sell (point-of-
sale-cost).
❑ Costs that are incurred to get the assets to the market, such as
transport and other costs are excluded from ‘costs to sell’ since
they are deducted in determining the fair values .
IN FAIR Recognition
Journal Entries : Gain on initial recognition
VALUES Dr Biological assets/Agricultural produce
due to Cr Gain on FV Change- SOPL
1) Physical
Changes in size, age, quality etc
Changes
Between
2) Price Recognised as Gain or Loss in the SOPL
reporting dates
Changes (on Subsequent
Journal Entries : Loss on Fair Value Change
Measurement
Dr Loss on FV Change- SOPL
Yusnaliza & Noor Saatila - UiTM Perak
Cr Biological assets/Agricultural produce
38
MEASUREMENT OF BEARER PLANT
BEFORE MATURITY, bearer plants must be
The measured at COST, similar to the accounting
measurement treatment for a self-constructed property, plant
requirements and equipment before it is available for use; and
for bearer
plants should
be in
accordance AFTER THE BEARER PLANT IS MATURE, entities have a
with MFRS 116 policy choice to measure the bearer plants using
PPE as follows : either the cost model or the revaluation model
In 20X1 eight calves were born and the entity sold 10 heifers for RM200
each, incurring selling costs of RM10 per heifer. The fair value less costs to
sell of the herd as at 31 December 20X1 is RM14,000 ( including the gain on
initial recognition of RM1,200 re-measured on 31.12.20x1 for similar eight
new-born calves)
Required:
i. Explain the appropriate accounting treatment of the
sheep for the year ended 31 December 20x8.
ii. Prepare the journal entries to record the above
transactions
Yusnaliza & Noor Saatila - UiTM Perak Source: UiTM/FAR320: Group Assignment (amended)
46 Answer 3: Recognition and Measurement
i) On 1 January 20x8, the sheep is recognised a biological asset according to MFRS
141 Agriculture as it is a living animal reared for wool in engaged in a sheep farming
(agricultural activity). It is initially measured at a cost of RM120,000.
At the end of reporting period of 31 December 20x8, there was a gain in changes of
fair value of biological asset amounted to RM4,100 [(67,500-3,400)- 60,000],
recognised as an income in SOPL. On 31 December 2018 the carrying amount of
the biological asset shown in the SOFP is RM64,100.
Required:
a. Explain the classification of coconut tree.
b. Show relevant journal entries and extract of Statement of Financial Position to account or both the land
coconut trees during 20x6?
Source: http://theaudituniverse.blogspot.com/2016/04/accounting-for-bearer-plants.html
Coconut Trees
The coconut tree is a living plant that meets the definition of bearer
plants as per MFRS 116. This is because the coconut tree:
a) is used in the production or supply of agricultural produce ;
production of coconut water concentrate, virgin coconut oil, and
coconut milk ;
b) is expected to bear produce for more than one period: will
provide fruits for 12 years ; and
c) has a remote likelihood of being sold as agricultural
produce.
Therefore, on 2 January 20x6, coconut tree will be recognized as PPE
and is measured initially at COST at RM5,000,000 .
Source: http://theaudituniverse.blogspot.com/2016/04/accounting-for-bearer-plants.html
Non-Current Assets RM
Property, Plant and equipment 14,583,333
Workings