How do you find the fair value of a biological asset?

Spread the love

The International Accounting Standard 41 (IAS 41) states that a biological asset is any living plant or animal owned by the business, and they are typically measured at fair value minus selling costs.

What are the three criteria in recognizing a biological asset?

a description of those biological assets. an explanation of why fair value cannot be measured reliably. the range of estimates within which fair value is highly likely to lie (if possible)

How should biological assets be measured?

A biological asset shall be measured on initial recognition and at the end of each reporting period at its fair value less costs to sell, except for the case described in paragraph 30 where the fair value cannot be measured reliably.

What is the initial recognition for biological assets?

Recognition of biological assets On initial recognition, the biological asset (including growing produce on a bearer plant) is required to be measured at its fair value less costs to sell, since it is presumed that the fair value can be measured reliably.

Where the fair value of the biological asset Cannot be determined reliably?

Biological assets: A biological asset shall be measured on initial recognition and at the end of each reporting period at its fair value less costs to sell, except where the fair value cannot be measured reliably.

Is there depreciation for biological assets?

In such a case, that biological asset shall be measured at its cost less any accumulated depreciation and any accumulated impairment losses. Once the fair value of such a biological asset becomes reliably measurable, an entity shall measure it at its fair value less costs to sell.

What are the two categories of biological assets?

There are two general categories of biological assets: bearer-plant and non-bearer-plant assets. Within the non-bearer-plant category there are three subcategories: animals, crops, and forests. Bearer-plant assets (SIC codes 171–182) are living plants that ultimately generate produce for more than one year.

What is the difference between agricultural activity and biological assets?

Agricultural activity is the management of the biological transformation of biological assets (living animals or plants) and harvest of biological assets for sale or for conversion into agricultural produce or into additional biological assets.

Are biological assets considered inventory?

No. The produce or harvest from a biological asset (for example, milk, tea leaves and lumber) is inventory. The harvested produce is transferred to inventory at fair value less costs to sell; it is thereafter accounted for in accordance with IAS 2, ‘Inventories’.

Is agricultural land a biological asset?

IAS 41 applies to biological assets with the exception of bearer plants, agricultural produce at the point of harvest, and government grants related to these biological assets.

Are bearer plants considered biological assets?

The scope sections of both standards are then amended to clarify that biological assets except for bearer plants are accounted for under IAS 41 while bearer plants are accounted for under IAS 16.

Are eggs biological asset?

Agricultural produce. Agricultural produce is the harvested produce of the entity’s biological assets. Examples are apples, eggs, milk, or meat.

What is consumable biological assets?

Consumable biological assets are those biological assets that are to be harvested as agricultural produce or sold as biological assets, for example, where cows are bred as a food source, the resulting beef is agriculture produce. Such assets embody future economic benefits.

Where are assets held for sale reported?

Assets held for sale are presented separately in the financial statements. These can be reported either in the statement of financial position (the balance sheet) or in the notes to financial statements.

What is the best evidence of fair value of an investment property?

Carrying Amount of Investments The carrying amount for current investments is the lower of cost and fair value. In respect of investments for which an active market exists, market value generally provides the best evidence of fair value.

When an entity uses fair value to measure the investment property?

Fair value model If an entity determines that the fair value of an investment property (other than an investment property under construction) is not reliably determinable on a continuing basis, the entity shall measure that investment property using the cost model in IAS 16.

Which of the following is a biological asset?

Solution(By Examveda Team) Living plants and animals is a biological asset. Biological asset is any living plant or animals owned by the business, and are typically measured at fair value minus selling costs.

Is livestock considered an asset?

All other livestock, such as breeding animals, cattle hogs, sheep, goats and longer-lived production animals are to be considered assets. The direct and indirect costs of care and development are tracked and accumulated until maturity and then capitalized to the asset.

Are fruit trees assets?

Agricultural produce are not biological assets but are rather like any other merchandise. Thus, a business must recognize them as inventory rather than biological assets. Upon initial recognition of agricultural produce, its value must be equal to its fair value less estimated costs to sell.

Is oil palm a biological assets?

Biological assets harvested as agricultural produce are known as consumable biological assets (CBA). Biological assets other than CBA are known as bearer biological assets (BBA). BBA are not agricultural produce but, rather, produce agricultural produce, for example, an oil palm.

Are security dogs biological assets?

While the guard dogs are biological assets, the entity is not engaged in agricultural activity.

Is a dog a biological asset?

Imagine you have a dog. Logically, it is a living animal, and therefore it is a biological asset.

Are biological assets current assets?

Biological assets are generally perishable and are like current assets in the balance sheet.

What are biological assets other than bearer plants?

Examples of consumable biological assets are livestock intended for the production of meat, livestock held for sale, fish in farms, crops such as maize and wheat, produce on a bearer plant and trees being grown for lumber.

Are seeds biological assets?

Biological Assets are living plants and animals such as trees in a plantation or orchard, cultivated plants, sheep and cattle. Bearer Biological Assets which are held to bear agricultural produce are classified as Bearer plants. Biological Assets The Company’s biological assets consist of seeds and cannabis plants.

Do NOT follow this link or you will be banned from the site!