IAS 41 Agriculture

International Accounting Standard 41

Issued: issued in 2000, followed by amendments
Effective date: 1 January 2003
What it does:
- IAS 41 applies to biological assets, agricultural activity and government grants related to biological assets measured at fair value less costs to sell.
- It Standard provides definitions of:
  - Agricultural activity (and its examples: raising livestock, cropping, cultivating orchards and plantations, etc.),
  - Biological transformation,
  - Biological asset (living animal or plant),
  - Bearer plant,
  - Agricultural produce (harvested product of entity’s biological assets), etc.
- IAS 41 sets 3 recognition criteria for biological asset or agricultural produce:
  1. Control of an asset by the entity as a result of past events;
  2. Probable future economic benefits will flow to the entity; and
  3. Fair value or cost of the asset can be measured reliably.
- 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.
- Agricultural produceharvested from an entity’s biological assets shall be measured at its fair value less costs to sell at the point of harvest.
- IAS 41 then deals with gains and losses, inability to measure fair value reliably, provides rules for government grants related to biological assets.
- IAS 41 requires number of disclosures.
- Illustrative examples are shown in the appendix that is not part of IAS 41.

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