LECTURE 1/4 : MFRS 141/ IAS 41 AGRICULTURE (BIOLOGICAL ASSETS) : FAR320 TOPIC 2 - PART 1
Summary
TLDRThis lecture delves into the intricacies of agricultural accounting, focusing on International Accounting Standards 41. It defines agricultural and biological assets, emphasizing their living nature, and discusses their initial and subsequent measurement, primarily at fair value. The lecture explores the transformation of biological assets into agricultural produce, the importance of management in agricultural activities, and the distinction between consumable and non-consumable biological assets. Examples of various agricultural activities, such as dairy farming and forestry, are provided to illustrate the concepts.
Takeaways
- 🌱 Agricultural assets refer to living animals and plants.
- 📈 Agricultural activity involves the transformation of biological assets.
- 💰 Initial measurement of agricultural assets is typically done at fair value.
- 🌾 Biological assets include animals and plants managed by an entity.
- 🛠️ Fair value measurement is preferred unless it cannot be reliably measured.
- 📉 Agricultural produce is the harvested product of biological assets.
- 🐄 Dairy cows and other livestock are examples of biological assets.
- 🌳 Timber from forestry activities is considered agricultural produce.
- 🍇 Grapes from vineyards and other fruits are examples of agricultural produce.
- 🧮 Relevant accounting entries are needed for changes in fair value of biological assets.
Q & A
What is the focus of the lecture on agriculture in relation to International Accounting Standards 41?
-The lecture focuses on defining agricultural or biological assets, discussing their initial and subsequent measurement, and understanding how to account for and present these assets in financial statements according to International Accounting Standards 41.
What is the definition of a biological asset according to the lecture?
-A biological asset refers to living animals and plants that are under management and are expected to generate future economic benefits through biological transformation and harvest.
What are the general requirements for measuring biological assets in terms of fair value?
-Biological assets are generally required to be measured at fair value if an active market price is available. If fair value cannot be reliably measured, the cost can be used instead.
What is the concept of agricultural activity as discussed in the lecture?
-Agricultural activity refers to the management and transformation of biological assets, such as the growth and maturation of plants and animals, which are expected to produce agricultural produce.
How are harvested products defined in the context of agricultural accounting?
-Harvested products are the result of the biological transformation and harvest of biological assets, such as the milk from a dairy cow, fruits from trees, or timber from a forest.
What is the difference between consumable and non-consumable biological assets?
-Consumable biological assets are those that are harvested as agricultural produce and are intended for sale, like fruits or livestock. Non-consumable biological assets are not intended for harvest as produce but may be used for other purposes, such as ornamental plants.
How does the lecture distinguish between managed and unmanaged biological assets?
-Managed biological assets are those under the control of the entity and are part of agricultural activities, such as farmed fish or cultivated crops. Unmanaged assets, like wild fish in the sea, are not considered biological assets for accounting purposes.
What are some examples of agricultural activities mentioned in the lecture?
-Examples of agricultural activities include dairy farming, livestock and poultry farming, prawn farming, horse and cattle breeding, forestry activities for timber, cultivating vineyards, and floriculture.
How does the lecture explain the concept of 'biological transformation' in relation to agricultural assets?
-Biological transformation refers to the growth, degeneration, production, and procreation of biological assets, which leads to either quantitative or qualitative changes in the assets, such as a tree growing to maturity or a cow producing milk.
What is the significance of distinguishing between consumable and non-consumable biological assets in accounting?
-The distinction is important for proper accounting and financial reporting, as consumable assets are expected to generate future economic benefits through sale or conversion into agricultural produce, while non-consumable assets may serve other purposes and have different accounting treatments.
How does the lecture address the presentation of agricultural assets in financial statements?
-The lecture suggests that the presentation of agricultural assets in financial statements involves determining whether they are current or non-current assets and ensuring that any gains or losses related to changes in fair value are properly accounted for.
Outlines
🌱 Introduction to Agricultural Accounting Standards
This paragraph introduces the lecture on agricultural accounting, focusing on International Accounting Standards 41. It outlines the learning objectives, which include defining agricultural or biological assets, discussing their initial and subsequent measurement, and understanding their presentation in financial statements. The paragraph emphasizes the importance of fair value measurement when an active market exists, and the concept of biological assets as living animals and plants under management, which are subject to transformation processes such as growth and production.
🐄 Biological Assets and Agricultural Produce
The second paragraph delves into the specifics of biological assets, which are living animals and plants managed for agricultural purposes. It discusses the transformation and harvest of these assets, leading to the creation of agricultural produce. The paragraph also explains the future economic benefits derived from these assets, such as sale, production of consumable products, and the creation of additional biological assets. It distinguishes between managed biological assets and unmanaged activities, like circus animals or garden displays, which do not qualify as biological assets under the accounting standards.
🐠 Agricultural Activities and Consumable Biological Assets
This paragraph provides examples of agricultural activities and defines consumable biological assets within the context of IAS 41. It includes various forms of farming such as dairy, poultry, livestock, and prawn farming, emphasizing the management and control over these biological assets. The paragraph also discusses the concept of agricultural produce, which is the harvested output from biological assets, and distinguishes between consumable biological assets like mangoes and non-consumable ones like timber from forestry activities.
Mindmap
Keywords
💡Agricultural Assets
💡Biological Transformation
💡Fair Value Measurement
💡Agricultural Produce
💡Initial Measurement
💡Subsequent Measurement
💡Future Economic Benefits
💡Managed Activities
💡Consumable Biological Assets
💡Bearer Plants
Highlights
Introduction to International Accounting Standards (IAS) 41 issued by the International Accounting Standards Board.
Definition and measurement of agricultural or biological assets.
Biological assets refer to living animals and plants, distinguishing them from non-living tangible items.
Initial and subsequent measurement of agricultural or biological assets.
Agricultural activity involves the transformation of biological assets from birth or planting to maturity.
Examples of agricultural produce include flowers from plants and milk from dairy cows.
Biological assets are generally measured at fair value unless fair value cannot be measured reliably.
Agricultural activities are managed by the company and include activities like fish farming, planting, and growing animals.
The management of biological transformation and harvest of biological assets for sale or conversion into agricultural produce.
Future economic benefits generated from agricultural assets and produce.
Harvesting of produce from biological assets, such as picking strawberries from bushes.
Biological assets include consumable assets that can be harvested or sold, such as mangoes and calves.
Examples of agricultural activities include dairy farming, livestock raising, poultry farming, and fish farming.
Forestry activities result in agricultural produce like lumber and timber.
Vineyard cultivation and the distinction between biological assets (trees) and agricultural produce (grapes).
Transcripts
this is a lecture format for us 141
agriculture would you stop it for for
our subject for 320 and in the first one
for one agriculture is if you will into
the International Accounting Standards
41 that was issued by International
Accounting Standards Bart
so let's touch so this is the topic
outcomes should be able to define
agricultural or biological assets at the
end of the at the end of the topic they
should be able to discuss the initial
measurement yeah usual measurement of
agriculture or biological asset will be
looking at where biological asset for
star let me inform you with about Eagle
asset refers to living animal and living
plants so it's not about tangible items
please do not have life but this is
about living things which is living
animal and living plants we also be
looking at a subsequent measurement of
agricultural biodiversity prepare the
relevant accounting entries to record
the magical assets and whatever gain or
loss pertaining to the change in fair
value later looking at presentation the
suppo and also how we present the asset
logical asset in the soft P is it a
non-current asset or is it a current
asset let's start looking at the detail
so this in a forest and a forest one for
one sets accounting for agricultural
activity for start you should know that
agricultural activity talks about
transformation of biological assets
right meaning something to do with how
the plans are being transformed how
animals transform from day one of being
born until it becomes a mature animal
and from the day the plant is being
cultivated being planted until it bear
the first fruit for example the first
flower for example oh we are looking at
the transformation of this into
agricultural produce so the flower for
example is the produce coming from the
flanks the milk for example is actually
the agricultural produce of the dairy
cow so those are called harvested
product to be looking into that and as
you are aware we need measurement to
measure asset and for biological asset
standards generally requires to be
measured at fair value so whenever there
is an active market price
there are FRS one-for-one says you must
use fair value unless the fair value is
not available fair value could be not be
able to have an active market no
whatsoever the issue you can measure
using cost but generally standard in
favor of fair value unless fair you
cannot be measured reliably next what
before we start on the first one for one
is on agricultural activity so
agriculture TBT we need to first
understand what is agricultural activity
before we start looking at those animals
and plants that are mannish as part of
agricultural activities so according to
IMF RS 1 for 1 this is the management
meeting that we are talking about the
activities that are being managed by the
company so we are not talking about
unmanaged activities we're not talking
about the fish in the sea or ocean fish
farming we are talking about the fish or
whatever activities the planting or the
of 3
or the growing of animals which are
under the management of the entity where
management here management of biological
transformation yeah how is the changes
of this biological asset and the harvest
of this harvest of the biological asset
4-cyl right but you call transformation
for still let's say you want to sell the
budget but the animal that you have
already managed in your farm right so
for sale or maybe the magical asset yeah
as a result of that you have harvested
the magical asset and big that gives you
the agricultural produce and that
agricultural produce is as a result of
magical transformation and harvest off
multiple asset so and the last one is
according to Emma Flores one for one how
the magical transformation and harvest
or magical asset was actually done for
the conversion into additional
biological asset so these three things
here is actually the future economic
benefits that will be generated for the
magical asset and agricultural produce
right so therefore the sea robotica
asset will bring future economic
benefits the agricultural produce coming
from the detachment from the biological
asset will also brings future economic
benefits if you bought that agricultural
produce
let's say the flower here are being sold
right conversion into additional value
can asset let's say the chicken you go
and have more chicks here and those are
additional biological asset right so
those are also the most possible or
probable future economic benefits of the
entity but it comes from this to process
of magical transformation and the
harvest of the magical asset that has
undergone the magical transformation
so whatever unmanaged activities or
things done for rectory recreational
purpose these are not magical asset
let's say you manage an animal for a
circus or maybe just have a trees for
the purpose of putting them in your
garden just to have that as a display
those are not biological assets so these
are there an important definition as I
said it's about the management
activities being managed it's about the
biological transformation of the body
per asset and the harvest of that
magical asset the detachment of the
biological asset yeah and that was done
for three purpose for sale for
conversion into agricultural produce and
for conversion into additional budget
and I mentioned to you just now this is
the so-called future economic benefits
and I mentioned the word physical
transformation when we talk about
agricultural activity so what our custom
bicycle transformation you'll go into
detail later but that in simple word is
about growth degeneration production and
procreation or magical asset that will
cost either quantitative or qualitative
changes in the bicycle asset so most
importantly is that vertical asset
refers to animal and plant the living
animal living plant which is under our
management but plan here we'll have some
exception now we see later this one will
be an exception of a pair of plants
agricultural produce determined we
mentioned here
it's the harvested Prada of the
biological asset as I mentioned earlier
let's say mangu is the harvested Prada
of the mango tree durian is the
harvested product of a do entry or the
latex is the harvest intruder of a rumba
tree right and maybe lumber is the
product comes from the forest raishin
those are all agricultural produce you
can see this is my example later harvest
is the detachment of produce from
biological asset so if you go and take
the strawberry from the strawberry bush
bushel alright so there for you that one
is actually the detachment of produce
right and also when you see about little
asset like process let's say the
slaughtering of animal yeah anymore
being slaughtered that will seize the
life of magical asset yes a d-ring there
so called ideal at her mind a lot of her
celebration that's raw of slaughtering
taking place cost to sell all this will
cover into detail later and you should
also know what are consumable by asset
which is within the context of a mefaris
one-for-one that refers to those that
are to be harvested as agricultural
produce so let's say mango yes now was
the consumable you can asset or soul as
biological asset let's say you have the
cow that gave birth to a calf and that
calf later can be sold as biological
assets those are consumable by multiple
asset right so you can go through this
yourself fish in the farm crops such as
means we'd only be debris an immolation
context or maybe mango right production
of
these are all consumable magical assets
right and also produce on a better plant
right so let's look at the next part
these are some example of agricultural
activities where you can see here it's
about dairy cow maybe this one is dairy
cow in New Zealand or maybe the Erica in
Kunduz San Saba yeah because dairy cow
are normally being there for us to get
milk for the milking there you go
raising livestock poultry chicken duck
farming all the cow and sheep farming
you can see the pictures their vision
grandpa farming I'm talking about the
fish which are in our coupon the prawn
which is within our control the one
inside this cage for example not the one
which is somewhere here which is not
within our control the one under our
management right same thing goes here
the one under our management they say
this one is under our management our
company but this one belongs to others
so this is not our biological I said our
prawn farming that is under our control
so from like horse and cattle breeding
yeah you breathe them not for milk but
it was for example the horse is later
being sold off because they won the
horse needed to use as a transportation
during those Cowboys movie those days or
maybe to use in the race costs to get
them more future economy benefits so
that is the one this one is dairy cow
maybe we breed them for the purpose of
getting the
agricultural produce the milk you can
see this forestry activities which give
rot the result here is the lumber the
timber and those other agricultural
produce cultivating wineyards just like
all palm this is grape fruit where the
grape is the agricultural produce right
the trees is going to be the biological
asset they do when it takes around 5
years for degree and three to four five
around four to five years Cody ran to
first bear the fruits and the rent fruit
is actually the agricultural produce but
durian trees here yeah it will keep on
producing you and for the next maybe
five to ten years ten years right so the
venturi is not a biological asset is a
better plan you'll see this this one is
the paddy field right this one
also under the paddy plantation the
Harmony's trees are a better plan but
the Harmony's fruit itself is an
agricultural produce we're going to talk
about better plans and there are some my
floriculture activity where for recalls
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