TOA reviewer (UE) biological assets

Review Module 3
Biological Assets

P.M.G. Clamor
August 24, 2011

Biological asset – living plants and living animals
Agricultural produce – harvested product of entity’s biological
assets
Harvest – detachment of produce from biological asset or cessation
of biological asset’s life processes
PAS 41 (Agriculture): It is applied to agricultural produce at the
point of harvest. Processing of agricultural process shall be applied
by PAS 2 (Inventories)
Agricultural activity – management of biological transformation or
harvest of biological assets for sale, conversion into agricultural
produce or production of additional biological assets
Recognition
1. Control to the assets due to past events
2. Probability of inflow of economic benefits associated to
asset
3. Reliability of measurement
Measurement
 Biological asset – at fair value less cost to sell
 Agricultural produce – at fair value less cost to sell at the
point of harvest
Fair value in biological assets
1. Quoted price in active market
a. Items traded are homogenous
b. Buyers and sellers are found at any time
c. Price are available to public

2. Recent market transaction price
3. Market price for similar asset with adjustments
4. Sector benchmark (by quantity pricing)
5. Present value of expected net cash flows
Cost to sell – cost directly attributable to disposal of asset
Pro-forma Entries
1. Acquisition of biological assets
Biological assets
xxx
Cash/Accounts payable

xxx

2. Birth of biological assets & increase in fair value
Biological assets
xxx
Gain from change in FV
xxx
3. Decrease in fair value
Loss from change in FV
Biological assets

xxx
xxx

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