Agriculture Ias. IAS 41 Agriculture previously required all biological assets related to agricultural activity to be measured at fair value less costs to sell This is based on the principle that the biological transformation that these assets undergo during their lifespan is best reflected by fair value measurement However there is a subset of biological assets known as bearer plants.
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Agricultural produce harvested from an entity’s biological assets shall be measured at its fair value less costs to sell at the point of harvest After point of harvest it is measured using IAS 2 Inventories (ie harvested cotton becomes raw material for clothes) at the lower of cost or net realizable value Fair Value.
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IAS 41 Agriculture sets out the accounting for agricultural activity – the transformation of biological assets (living plants and animals) into agricultural produce (harvested product of the entity’s biological assets) The standard generally requires biological assets to be measured at fair value less costs to sell.