In: Accounting
The application of MFRS141 Agriculture has raised several issues and concerns among the preparers of financial statement. Discuss.
The change in fair value of biological assets is part physical change (growth, etc) and part unit price change. Separate disclosure of the two components is encouraged, not required.
Agricultural produce is measured at fair value less costs to sell at harvest, and this measurement is considered the cost of the produce at that time (for the purposes of Inventories or any other applicable standard). Agricultural land is accounted Property, Plant and Equipment. However, biological assets (other than bearer plants) that are physically attached to land are measured as biological assets separate from the land. In some cases, the determination of the fair value less costs to sell of the biological asset can be based on the fair value of the combined asset (land, improvements and biological assets).
If fair value cannot be measured reliably, additional required disclosures include:
If the fair value of biological assets previously measured at cost subsequently becomes available, certain additional disclosures are required.