IFRS Standard: IAS 41 Agriculture

The objective of IAS 41 is to prescribe the accounting treatment and disclosures related to agricultural activity. IAS 41 shall be applied to account for the following when they relate to agricultural activity: (a) biological assets, except for bearer plants; (b) agricultural produce at the point of harvest; and (c) government grants.

IAS 41 Objective Scope

Objective

The objective of this Standard is to prescribe the accounting treatment and disclosures related to agricultural activity.

Scope

1 This Standard shall be applied to account for the following when they relate to agricultural activity:

  1. biological assets, except for bearer plants;
  2. agricultural produce at the point of harvest; and
  3. government grants covered by paragraphs 34 and 35.

2 This Standard does not apply to:

  1. land related to agricultural activity (see IAS 16 Property, Plant and Equipment and IAS 40 Investment Property).
  2. bearer plants related to agricultural activity (see IAS 16). However, this Standard applies to the produce on those bearer plants.
  3. government grants related to bearer plants (see IAS 20 Accounting for Government Grants and Disclosure
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IAS 41 Definitions

Agriculture-related definitions

5 The following terms are used in this Standard with the meanings specified:

Agricultural activity is the management by an entity of the biological transformation and harvest of biological assets for sale or for conversion into agricultural produce or into additional biological assets.

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

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.

A biological asset is a living animal or plant.

Biological transformation comprises the processes of growth, degeneration, production, and procreation Read more

IAS 41 Recognition and measurement

10 An entity shall recognise a biological asset or agricultural produce when, and only when:

  1. the entity controls the asset as a result of past events;
  2. it is probable that future economic benefits associated with the asset will flow to the entity; and
  3. the fair value or cost of the asset can be measured reliably.

11 In agricultural activity, control may be evidenced by, for example, legal ownership of cattle and the branding or otherwise marking of the cattle on acquisition, birth, or weaning. The future benefits are normally assessed by measuring the significant physical attributes.

12 A biological asset shall be measured on initial recognition and at the end of each reporting period at its fair value less Read more

IAS 41 Government grants

34 An unconditional government grant related to a biological asset measured at its fair value less costs to sell shall be recognised in profit or loss when, and only when, the government grant becomes receivable.

35 If a government grant related to a biological asset measured at its fair value less costs to sell is conditional, including when a government grant requires an entity not to engage in specified agricultural activity, an entity shall recognise the government grant in profit or loss when, and only when, the conditions attaching to the government grant are met.

36 Terms and conditions of government grants vary. For example, a grant may require an entity to farm in a particular location for five Read more

IAS 41 Disclosure

39 [Deleted]

General

40 An entity shall disclose the aggregate gain or loss arising during the current period on initial recognition of biological assets and agricultural produce and from the change in fair value less costs to sell of biological assets.

41 An entity shall provide a description of each group of biological assets.

42 The disclosure required by paragraph 41 may take the form of a narrative or quantified description.

43 An entity is encouraged to provide a quantified description of each group of biological assets, distinguishing between consumable and bearer biological assets or between mature and immature biological assets, as appropriate. For example, an entity may disclose the carrying amounts of consumable biological assets and bearer biological Read more