C8: Agriculture (FOR FINALS)

Monday, February 6, 2023 8:09 PM

• DENR
○ Philippine rice

• Agriculture - means farming or the process of producing crops and raising livestock.
• Agricultural activity - is the management by an entity of the biological transformation and harvest
of biological assets for sale, including exchange or non-exchange transactions, or for conversion into
agricultural produce, or into additional biological assets.
• Common features:
○ Capability to change - living animals and plants are capable of biological transformation
○ Management of change -
○ Measurement of change
• Biological transformation -
○

Recognition - When it meets the asset recognition criteria, including the reliable measurement of its
fair value

Measurement • Biological assets:

- Initial & subsequently measured @ its FV less costs to sell
• Biological assets FV cannot be measured:
- Initial: cost
- Sub: cost less accumulated depreciation and accumulated impairment losses
• Agricultural produce:
- Initial: FV less costs to sell at the point of harvest
○ Gain ->> recognized as surplus or deficit
- Sub: measurement basis for inventories or other basis
Cost to sell: are the incremental costs directly attributable to the disposal of an asset,
excluding finance costs and income taxes.

Determination a.
of FV Quoted price in an active market xx
(208) Transport costs (xx)
FAIR VALUE XX

- Active market : a market in which all the following conditions exist:

a. The items traded in the market are homogeneous;
b. Willing buyers and sellers can normally be found at any time;
c. Prices are available to the public
C8 Agri...
• >1 market: expected market to be used
• No active market:
Audio recording started: 6:18 pm Thursday, 9 February 2023
1. Most recent transaction price
2. Market prices for similar assets
3. Sector benchmarks
4. Present value of expected net cash flows
b. Determination of FV may be facilitated by grouping biological assets or agricultural
produce according to significant attributes
c. Cost may sometimes approximate FV, particularly when:
• Little biological transformation has taken place since initial cost incurrence
• The impact of the biological transformation on price is not expected to be
material
d. Biological assets attached to land:
- Active market is COMBINED
- Value of the RAW LAND & LAND IMPROVEMENT may be deducted to the FV of
the biological asset
e. Recognized @ FV less cost to sell, shall be recognized as is until disposal

Disclosures What is a Disclosure? A disclosure is additional information attached to an entity's

financial statements, usually as explanation for activities which have significantly
influenced the entity's financial results.
- Aggregate gain/loss on initial recognition of biological assets and agricultural produce
and from the change in FV less costs to sell of biological assets.
- Consumable and Bearer biological assets and biological assets held for sale and held for
distribution at no charge or for nominal change
Consumable BA - harvested as agricultural produce or to be sold / distributed as

Government and NPO Accounting Page 1

 • Consumable BA - harvested as agricultural produce or to be sold / distributed as
BA (livestock intended for meat, annual crops…)
• Bearer BA - self-generating and are used repeatedly for more than 1 year. (dairy,
fruit trees…)
- Mature and immature BA
• Mature - attained harvestable specifications [consumable] / able to sustain regular
harvest [bearer]
- The amount of change in the FV less cost to sell due to physical changes and due to
price changes.

Journal
entries

Government and NPO Accounting Page 2