PAS 41 With Notes Evrc

7/28/2019 PAS 41 With Notes Evrc

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PAS 41

AGRICULTURE &

Section 34 of

PFRS for SMEs


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Define biological assets and agricultural

produce

Initially measure and recognize biological

assets and agricultural produce

Account for changes in biological assets

Present biological assets on the financial

statementsIdentify required disclosures relating to

agricultural activity


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Applies to accounting for

Biological assets

Agricultural produce, only at the point of

harvest

Government grants related to biological

assets measured at fair value less

estimated point of sale costs


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PAS 41 does not apply to

Land related to agricultural activity

Intangible assets related to agricultural activity

Government grants of biological assets measured

at cost less accumulated depreciation andimpairment loss.


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The Management by an entity ofthe biological transformation andharvest of biological assets forsale or for conversion intoagricultural produce or into

additional biological assets

AgriculturalActivity

Comprises the processes ofgrowth, degeneration,production, and procreation thatcause qualitative or quantitative

changes in a biological assets

Biological

Transformation

Harvest is the detachment ofproduce from a biological assetor the cessation of a biologicalassets life processes.

Harvest


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The harvested product ofthe entitys biological assets

Agriculturalproduce

Living animals and plantsBiological

assets

Aggregation of similar livinganimals or plants

Group ofbiological

assets


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Dried mango

factory


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Sheep

Trees in a

plantationforest

Plants

Dairy Cattle

Pigs

Bushes

Vines Fruits Trees

Wool

Felledtress

Cotton

Harvestedcan

Milk

Carcass

Leaf

Grapes Picked

Fruit

Yarn,carpet

Logs,lumber

Thread,clothing

Sugar

Cheese

Sausages,cured

hams Tea, cured

tobacco

Wine

Processedfruit

Biological Assets Agricultural produce

Products that are the

result of processing after

harvest


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An entity recognizes a biological asset when

The enterprise controls the asset as a result of

past event

It is probable that future economic benefits

will flow to the entity. The fair value or cost should be measured reliably.

A biological asset should be measured initially and at each

balance sheet date at its fair value less costs-to-sell.

Exception is where the fair value cannot be measured

reliably.


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Initial recognition and at each balancesheet date

At fair value less cost-to-sell, exceptwhere the fair value cannot be

measured reliably.


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If an active market exists The quoted price in the market

If an active market does not exist, use one or

more of the following:

The most recent transaction price

Market prices for similar assets

Sector benchmarks

Present value of expected net cash flows


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INCLUDEDCommission to brokers and dealers

Levies by regulatory agencies

Commodity exchangesTransfer taxes and duties

EXCLUDED

Transport and other costs necessary to getassets to market


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When an animal is born:

Biological Asset xx

Income xx`

(Fair Value Less costs-to-sell)

When purchased

Biological Asset xxCash, others xx

(fair value less costs-to-sell)


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When an animal is born, gain arises from biologicaltransformation

Biological Assets (FV POS cost) 30k

Gain 30k

Losses can arise on the initial recognition of the

purchase, as the fair value less estimated point-of-salecosts are likely to be less than the total purchase priceplus transaction and transportation costs.

Biological Assets 30kLoss 2k

Cash (purchase price) 32k


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12/31/11 entry

Biological Assets Cattle 30K

Income

Change in FV of BA 30K

January 1

FV= P25K

December 31

FV = P55K

Change in the fair value less cost to sell of

biological assets during the reporting periodare included in profit or loss.


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All costs relating to biological assets, except

the cost of purchase, are taken to profit or

loss.

Expense xx

Cash, others xx

Fertilizers, feeds, labor


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The asset is measured at cost less

accumulated depreciation and

impairment losses

All other biological assets of the entity

still must be measured at fair value.

If FV becomes reliably measurable, the

entity must switch to fair value less point-

of-sale costs.


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Reconciliation of Carrying amounts of Daily Livestock

Carrying amount, Jan. 1, 2007 P459,570

Increases due to purchases 26,250

Gain arising from change in fair value

less POS costs attributable to

physical changes 15,350

Gain arising from change in fair value

less POS costs attributable to

price changes 24,580Decreases due to sales ( 100,000)

Carrying amount, December 31, 2007 P425,050


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Biological Assets 26,250

Cash 26,250


Gain Arising from Change in FV

Less POS Due to Physical Change 15,350

Gain Arising from Change in FV

Less POS Due to Price Change 24,580

Cash 100,000



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A herd of ten 2-year old animals was held at Jan. 1, 2007.One animal was purchased on July 1, 2007 for 108, and one animalwas born on July 1, 2007. No animals were sold or disposed of duringthe period. Per unit fair values less estimated POS costs were asfollows:January 1, 2007:

2 year old animal 100July 1, 2007

New born animal 702.5 year old animal 108

Dec. 31, 2007New born animal 720.5 year old animal 802 year old animal 1052.5 year old animal 1113 year old animal 120

Compute for Changes in FV attributable to Price Change and toPhysical Change and give entries for the foregoing.


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Ending balance:3 year old animals 11 x P120 P1,320

0.5 year old animal 1 x P80 80Total on the balance sheet P1,400

Increase in FV less POS cost due to Price Change2 years old at 01/01 10 x (105-100) P 50

Newborn at 07/01 1 x (72-70) 2

Purchased at 07/01 1 x (111-108) 3 55

Increase in FV less POS cost due to Physical Change3 years old 10 x (120 105) P1503 years old 1 x (120 111) 91 New born 1 x 70 70

at December 31 1 x (80 72) 8 237Total Change in FV (Income) P292


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Balance,Jan. 1 10 x 100 P1,000

Purchase on July 1 1 x 108 108

Change in FV less POS Cost

Due to Price Change 55

Change in FV less POS CostDue to Physical Change

(including the newborn on 7/01) 237

Balance, December 31, 2007 P1,400


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Purchase

Biological Assets 108

Cash 108

New born on July 1


Gain from Change in FV less

POS Cost due to Physical Change 70 Change in FV during the year


Gain from Change in FV less POS

Cost due to Price Change 55

Gain from Change in FV less POSCost due to Physical Change 167

(237 70)


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Agricultural produce is the harvested product of the entitys biological

assets.

Upon harvest:

Inventory xxIncome xx

(at fair value less point-of-sale-costs)

After harvest, IAS 2 Inventories will apply


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Initially recognized at fair value less costs

to sell at the point of harvest.

There is no exception to this rule as IAS

41 presumes that agricultural produce can

always be measured at fair value.

Cost to sell costs exclude transport and

other costs necessary to get the assets toa market.


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The aggregate gain or loss on initial recognition ofbiological assets and agricultural produce and from thechange in value less estimated point-of-sale costs of thebiological assets.

A description of each group of biological assets

The methods and assumptions applied in determining FV

The fair value less estimated point-of-sale costs ofagricultural produce harvested during the period

Restrictions on title

Commitments for the development and acquisition of

biological assets and managements financial riskstrategies


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Gain or loss on disposal

Where fair value cannot be reliably measured, thedepreciation method used, useful lives or depreciationrates

Reconciliation of changes in carrying amount, showingseparately changes in value, purchases, sales harvest,business combination and exchange differences.

If FV is not ascertainable for biological assets previouslymeasured at cost less accumulated depreciation andimpairment loss, an explanation why FV is now reliablymeasurable and the effect of the change

Nature and extent of government grants of biologicalassets, conditions that have not been fulfilled, andsignificant decreases in the expected level of thegrants.


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An unconditional government grant related

to a biological asset measured at its fair

value less costs to sell shall be recognized

in profit or loss when, and only when, the

government grant becomes receivable.

If a government grant related to a biological

asset measured at its fair value less costs to

sell is conditional, including when a

government grant requires an entity not toengage in specified agricultural activity, an

entity shall recognize the government grant

in profit or loss when, and only when, the

conditions attaching to the government grant

are met.


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Carrying amount of biological assets

Description of an entitys biological assets, by board group

Change in fair value less costs to sell during the period

Fair value less costs to sell of agricultural produce harvested

during the period

Description of the nature of an entitys activities with each group

of biological assets and non-financial measures or estimates of

physical quantities of output during the period and assets on

hand at the end of the period

Information about biological assets whose title is restricted or

that are pledge as security

Commitments for development or acquisition of assets

Financial risk management strategies


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Methods and assumptions for determining fair

value

Reconciliation of changes in the carrying amountof biological assets, showing separately changes

in value, purchase, sales, harvesting, business

combinations, and foreign exchange differences..

Disclosure of a quantified description of each

group of biological assets, distinguished between

consumable and bearer assets or betweenmature and immature assets, is encouraged but

not required.


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If the fair value cannot be measured reliably,

additional required disclosures include:

Description of the assets

An explanation of the circumstances If possible, a range within which fair value is

highly likely to lie

Depreciation method

Useful lives or depreciation rates

Gross carrying amount and accumulated

depreciation, beginning and ending.


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If the fair value of biological assets

previously measured at cost now becomes

available, certain additional disclosures

are required.

Disclosures relating to government grants

include the nature and extent of grants,

unfulfilled conditions, ad significant

decreases expected in the level of grants.

PAS 41 With Notes Evrc

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