Question

a) Explain how the concept of ‘biological asset’ is different from ‘bearer plant’. Give one (1) example to clarify your answer.
b) Elaborate the THREE (3) common features of agricultural activity as outlined by MFRS141 Agriculture. Illustrate your answer with an example.
c) Discuss whether the following activities fall within the scope of MFRS141 Agriculture:

i) Planting banana trees for banana fruits produce.
yes
ii) Planting rose tree for the rose flowers.
yes
iii) Poultry farming for the eggs produce.
yes
iv) Squid fishing in the open ocean.
no
v) Rearing cattle for beef production.
yes


d) The application of MFRS141 Agriculture has raised several issues and concerns among the preparers of financial statements. Discuss.

Answer 1

Ans a. Bearer plant is a living plant which is used in the production or supply of agriculture produce for more than one period and has a remote chance of being sold but it can be sold as scrap eg Banana plant is produces Banana in this case Banana is the agriculture produce and Banana plant itself is not agriculture produce but is used for production of agriculture produce AND "Biological Assets are assets that are living like trees , animals and cannabis too owned by buisness eg of Biologcal assets are vegetables , goats,fish, bananas etc

Biological assets	Agricultural produce	Products that are the result of processing after harvest
Sheep	Wool	Yarn, carpet

Ans b. common features of agricultural activity as outlined by MFRS141 are Carrying amount is the amount at which an asset is recognised in the statement of financial position.

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.

Produce growing on bearer plants is a biological asset.

Ans c. i) Planting banana trees for banana fruits produce.: Yes becasue the banana is the biological asset and banana trees are bearer plants

ii) Planting rose tree for the rose flowers.: Yes , Rose flowers is the biological asset and rose plants are bearer plants

iii) Poultry farming for the eggs produce.: Yes becasue the hens are kept in the poulty for the agriculture produce of egg which can be sold in the market for value

iv) Squid fishing in the open ocean : No this would not be considered under MFRS141 Agriculture because this is not breeded for any biological asset but fishing might be done for just fun purpose and not for any agriculturual activity

v) Rearing cattle for beef production.yes because the cattle is breeded for the produce of beef which is a biological asset beef which is soldi in the market for value

Ans d.  Application of MFRS141 Agriculture has raised several issues and concerns among the preparers of financial statements as there could be many challenges in practise like Initial scoping considerations, Identifying the costs that can be capitalised under IAS 16,Tracking bearer plants and unharvested agricultural produce separately.The requirements will give entities the option to continue measuring their bearer plants at fair value by applying a revaluation model under IAS 16. However, fair value changes will be recognised in other comprehensive income, rather than profit or loss.Entities will need to determine appropriate fair value measurement methodologies to measure the fair value of these assets separately from the bearer plants on which they are growing, which may increase the complexity and subjectivity of the measurement.