Agriculture-related definitions

Agriculture-related definitions

IAS 41 Definition Agricultural activity: The management by an entity of the biological transformation and harvest of biological assets for: Agriculture-related definitions

  • Sale;
  • Distribution at no charge or for a nominal charge; or
  • Conversion into agricultural produce or into additional biological assets for sale or for distribution at no charge or for a nominal charge.

Agricultural activity covers a diverse range of activities; for example, raising livestock, forestry, annual or perennial cropping, cultivating orchards and plantations, floriculture and aquaculture (including fish farming). Certain common features exist within this diversity:

  1. Capability to change. Living animals and plants are capable of biological transformation;
  2. Management of change. Management facilitates biological transformation by enhancing, or at least stabilising, conditions necessary for the process to take place (for example, nutrient levels, moisture, temperature, fertility, and light). Such management distinguishes agricultural activity from other activities. For example, harvesting from unmanaged sources (such as ocean fishing and deforestation) is not agricultural activity; and
  3. Measurement of change. The change in quality (for example, genetic merit, density, ripeness, fat cover, protein content, and fibre strength) or quantity (for example, progeny, weight, cubic metres, fibre length or diameter, and number of buds) brought about by biological transformation or harvest is measured and monitored as a routine management function.

Agricultural produce is the harvested produce of the entity’s biological assets.

A biological asset is a living animal or plant.

Biological transformation comprises the processes of growth, degeneration, production, and procreation that cause qualitative or quantitative changes in a biological asset. Biological transformation results in the following types of outcomes:

  1. asset changes through
    1. growth (an increase in quantity or improvement in quality of an animal or plant),
    2. degeneration (a decrease in the quantity or deterioration in quality of an animal or plant), or
    3. procreation (creation of additional living animals or plants); or
  2. production of agricultural produce such as latex, tea leaf, wool, and milk.

Biological transformation results in the following types of outcomes:

  1. asset changes through (i) growth (an increase in quantity or improvement in quality of an animal or plant), (ii) degeneration (a decrease in the quantity or deterioration in quality of an animal or plant), or (iii) procreation (creation of additional living animals or plants); or
  2. production of agricultural produce such as latex, tea leaf, wool, and milk.

Costs to sell are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income taxes.

A group of biological assets is an aggregation of similar living animals or plants.

Harvest is the detachment of produce from a biological asset or the cessation of a biological asset’s life processes.


A bearer plant is a living plant that:

  1. is used in the production or supply of agricultural produce;
  2. is expected to bear produce for more than one period; and
  3. has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.

The following are not bearer plants:

  1. plants cultivated to be harvested as agricultural produce (for example, trees grown for use as lumber);
  2. plants cultivated to produce agricultural produce when there is more than a remote likelihood that the entity will also harvest and sell the plant as agricultural produce, other than as incidental scrap sales (for example, trees that are cultivated both for their fruit and their lumber); and
  3. annual crops (for example, maize and wheat).

When bearer plants are no longer used to bear produce they might be cut down and sold as scrap, for example, for use as firewood. Such incidental scrap sales would not prevent the plant from satisfying the definition of a bearer plant. Produce growing on bearer plants is a biological asset.


Agriculture-related definitions Agriculture-related definitions Agriculture-related definitions

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