BIOLOGICAL

ASSETS
 IAS 41
S H A L L B E A P P L I E D TO AC C O U N T W H E N
T H E Y R E L AT E T O A G R I C U LT U R A L A C T I V I T Y
SUCH AS BIOLOGICAL ASSET EXCEPT
B E A R E R P L A N T S , A G R I C U LT U R A L P R O D U C E
A N D G O V E R N M E N T G R A N T R E L AT E D T O A
BIOLOGICAL ASSET
 PAS 2
R E F E R TO A S I N V E N TO R I E S – I T S H A L L B E
A P P L I E D T H E R E A F T E R AT T H E P O I N T O F
H A R V E S T A N D B E R E A DY F O R S A L E
I. DEFINITIONS
Biological Assets
 Living Animals and Living Plants owned by the entity for
agricultural activity
Agricultural Produce
Are the harvested product of an entity’s biological
assets
Inventories
Products after harvest is covered by inventories
II. EXAMPLE
Biological Asset Agricultural Produce Inventories

Sheep Wool Yarn & Carpet

Plant Harvested Cane Sugar

Dairy Cattle Milk Cheese

Vines Grapes Wine

Bushes Leaf Tea & Cured Tobacco

 TRIVIA
When there is a
Agricultural Activity biological
or transformation and
harvest of biological
Agriculture assets for sale or for
conversion into
agricultural produce or
into additional
biological assets
III. FEATURES OF AGRICULTURAL ACTIVITY

1.Capability to Change
2.Management of Change
3.Measurement of Change
 TRIVIA
Comprise of growth,
degeneration,
Biological production and
procreation that cause
Transformation qualitative or
quantitative changes in
biological asset.
IV. TYPE OF OUTCOME RESULT FROM
BIOLOGICAL TRANSFORMATION
1. Asset Changes through
1. Growth – increase in quantity or improvement of quality
of an animal or plant
2. Degeneration – decrease in quantity or deterioration in
quality of an animal or plant
3. Procreation – creation of additional living animal or plant
2. Production of agricultural produce (i.e. wool, milk,
tobacco)
V. RECOGNITION
Entity shall recognize biological asset and agricultural produce when:

1. Entity controls the asset results from past

events
2. It is probable that future economic benefits
associated with the asset will flow to the
entity
3. The fair value or cost of the asset can be
measured reliably
 TRIVIA
An entity can be in
control of an
Agricultural agricultural activity by
providing an evidence
Activity Control such as Legal
Ownership or Marking
it on acquisition or
birth.
VI. INITIAL MEASUREMENT

Biological Asset
Biological Asset Agriculture Produce attached to
Agricultural Land

@FV less cost of Disposal @FV less cost of disposal FV of Land less FV of
(commission to brokers, at the point of harvest Combined Asset
admission fee, any
incidental)

*loss may arise at the initial measurement

*disclose in Notes to FS
VII. SUBSEQUENT MEASUREMENT
Biological Asset Agricultural Produce
A change in FV less cost to sell Gain or loss @FV less cost to
of biological asset  included sell  included in profit or loss
in profit or loss for the period for the period in which it arises
in which it arises
FV not reliably determinable

Cost
Less: Accumulated Depreciation
Accumulated Impairment Losses
FAIR VALUE for Biological Asset
General Rule : change in biological asset, record as gain/loss
*can be change in physical or value
VIII. PRESENTATION

Non Current Asset

They are not expected to be disposed of within 12 months
from the end of the reporting period
IX. ILLUSTRATION
1. Acquisition
GDSB purchased a cattle at an auction for P2,000,000 on April 1, 2019.
Cost of transporting the cattle back to the company’s farm was P20,000 and the
company would have incur cost similar transportation cost if it was to sell the
cattle in the auction, in addition an auctioneer’s fee of 2% of sales price.

Biological Asset 1,940,000

Auctioneer’s Expense 40,000
Transportation Expense 20,000
Cash 2,000,000
IX. ILLUSTRATION
II. Change in FV
On March 1, 2019 PAPASA PA BA Corp acquired a pig. The purchase
price is 8,000,000 and the Fair Value less cost to sell upon purchase is 7,800,000.
During the year there is a change in Fair Value less cost to sell due to (a) price
changes with P2,400,000 (b) physical changes with 5,000,000. After the change
the sale of the cattle is 8,400,000. Prepare journal entries to record the
biological assets up to selling.
a. Upon Purchase
Biological Assets 7,800,000
Transportation Expense 200,000
Cash 8,000,000
IX. ILLUSTRATION
b. Increase in FV
Biological Assets 7,400,000
Income- Change in FV due to Price 2,400,000
Income- Change in FV due to Physical 5,000,000

c. Sale of Biological Asset

.
Cash 8,400,000
Biological Asset 8,400,000
 EXERCISE
1. PAPASA TAYO Corp has the following assets:
Freestanding Trees P2,500,000
Land under Trees 600,000
Roads in the Forest 500,000
Bearer Animals 1,200,000
Bearer Plants 1,100,000
Agricultural produce growing on bearer plants 400,000
Sheep 120,000
Lumber 250,000
Diseased pigs 100,000

a. What is the amount of Biological Assets?

b. What is the amount of PPE?
c. What is the amount of Inventories?
 EXERCISE
A group of 2-year-old cattle was held at January 1, 2019. on January 2, 2019, 5 calves were born and 5 two year-old cattle
were purchased for P12,000 each. No cows or calves were disposed of during the period.

Per unit fair values less cost to sell were as follows:

January 1, 2019
2 year-old Cattle 12,000
Newborn Cattle 4,000
December 31, 2019
2 year-old Cattle 13,000
3 year-old Cattle 15,000
1 year-old Cattle 7,000
Newborn Cattle 5,000
What is the amount of the Change in FV less Cost to Sell due to:
a. Physical Change
b. Price Change
PRICE CHANGE
January 1 December 31

20 Cattle aged 2 year-old (Jan 1)

20 x P12,000 20 x P13,000
=P240,000 =P260,000

5 Newborn (Jan 2)

5 x P4,000 5 x P5,000
=P20,000 =P25,000

5 Old Cattle aged 2 year-old (Jan 2)

5 x P12,000 5 x P13,000
=P60,000 =P65,000
PHYSICAL CHANGE
December 31
20 Cattle @ 2y/o
20 x P13,000 = P260,000
20 Cattle @ 3y/o
20 x P15,000 = P300,000
5 Newborn
5 x P4,000 = P25,000
5 Calves @ 1y/o
5 x P7,000 = P35,000
Purchased 5 Cattle @ 2y/o (P12,000)
5 x P13,000 = P65,000
Purchased 5 Cattle @ 3y/o (P12,000)

5 x P15,000 = P75,000