AGRICULTURE/BIOLOGIC

AL ASSETS
MFRS 141
INTRODUCTION

 MFRS 141 deals with two types of assets:

1. Biological assets
2. Agriculture produce
INTRODUCTION (Biological Assets)

 Biological assets – living plant and living animals.

 Related with managed agricultural activity (farming, fishing & forestry) that
are in the process of growing, degenerating, regenerating and/or
procreating and which are expected to eventually result in agricultural
produce.
 Divide into 2 -
 Consumable biological assets – sell the final products (e.g. tree for logging)
 Bearer biological assets – assets in intermediary (e.g. apple tree that bears fruits)
INTRODUCTION (Agriculture produce)

 Agriculture produce (output)

 Harvested products of biological assets (sheep, fish, fruits)
MFRS excludes:

1. Agricultural product after the point of harvest e.g. wool, meat, fruit,
rubber (MFRS 102)
2. The land which biological assets grow, regenerate (MFRS 116, MFRS 140)
3. Any intangible assets associated with the agricultural activity (MFRS 138)
4. Agricultural activity that is not managed e.g. harvesting from ocean
fishing.
5. Minerals, oils and natural gas.
RECOGNITION

1. Control – the entity must have ownership or rights of control akin to

ownership that result from a past event (risk and rewards)
2. Value – future economic benefits are expected to flow to the enterprise
from its ownership or control of the asset (future economic benefit)
3. Measurement – the cost of FV of the asset must be measured with
reliability
ISSUES

 The main issue addressed by MFRS 141:

 When should a biological asset or agricultural produce be recognized on the
statement of financial position?
 At what value should a recognized biological asset or agricultural produce be
measured?
 How should the differences in value of a recognized biological asset or
agricultural produce between two year end dates be accounted for?
MEASUREMENT

 For biological assets:

 Initial measurement: FV minus estimated point-of-sale costs
 Subsequent measurement: FV minus estimated point-of-sale costs
 For agricultural produce:
 Initial measurement: FV minus estimated point-of-sale costs
 Subsequent measurement: treated as inventory.

** point-of-sale costs include commissions to brokers & dealers, levies by regulatory

agencies and commodity exchanges and transfer taxes and duties. Exclude
transport & other costs necessary to get assets to a market.
Gains & Losses

 Gains and losses at initial recognition & subsequent recognition will be

reported as a gain and loss in the Statement of Profit or Loss.
 The aggregate gain/loss is attributed to two factors:
1. Physical change (Difference age but same period i.e. end of accounting
period)
2. Price change (Same age i.e. age during initial period but different period)
DISCLOSURE

 Aggregate gain or loss from the initial recognition of biological assets and agricultural
produce and the change of in FV less costs to sell during the period.
 description of an entity's biological assets, by broad group
 description of the nature of an entity's 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 pledged as security
 commitments for development or acquisition of biological assets
 financial risk management strategies
 reconciliation of changes in the carrying amount of biological assets, showing separately
changes in value, purchases, sales, harvesting, business combinations, and foreign
exchange differences
END