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International Accounting Standard 41 – Agriculture

This version includes amendments resulting from IFRSs issued up to 31 December 2010.

Note that this section of the International Accounting Manual has also been updated to include the text of
Standards issued through 19 October 2011.

IAS 41 was issued by the International Accounting Standards Committee in February 2001.

In April 2001 the International Accounting Standards Board resolved that all Standards and Interpretations
issued under previous Constitutions continued to be applicable unless and until they were amended or
withdrawn.

IAS 41 and its accompanying guidance have been amended by the following IFRSs:

l IAS 1 Presentation of Financial Statements (as revised in December 2003)

l IAS 2 Inventories (as revised in December 2003)

l IAS 21 The Effects of Changes in Foreign Exchange Rates (as revised in December 2003)

l IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (issued March 2004)

l IAS 1 Presentation of Financial Statements (as revised in September 2007)1

l Improvements to IFRSs (issued May 2008)2

l IFRS 9 Financial Instruments (issued November 2009)3

l IFRS 9 Financial Instruments (issued October 2010)4

l IFRS 13 Fair Value Measurements (issued May 2011)5

International Accounting Standard 41 Agriculture (IAS 41) is set out in paragraphs 1–61. All the
paragraphs have equal authority but retain the IASC format of the Standard when it was adopted
by the IASB. IAS 41 should be read in the context of its objective and the Basis for Conclusions,
the Preface to International Financial Reporting Standards and the Conceptual Framework for
Financial Reporting. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
provides a basis for selecting and applying accounting policies in the absence of explicit
guidance.

Introduction
IN1 IAS 41 prescribes the accounting treatment, financial statement presentation, and disclosures related to
agricultural activity, a matter not covered in other Standards. Agricultural activity is the management by an
entity of the biological transformation of living animals or plants (biological assets) for sale, into agricultural
produce, or into additional biological assets.
IN2 [Effective prior to 1 January 2009.] IAS 41 prescribes, among other things, the accounting treatment for
biological assets during the period of growth, degeneration, production, and procreation, and for the initial
measurement of agricultural produce at the point of harvest. It requires measurement at fair value less
estimated point-of-sale costs from initial recognition of biological assets up to the point of harvest, other than
when fair value cannot be measured reliably on initial recognition. However, IAS 41 does not deal with
processing of agricultural produce after harvest; for example, processing grapes into wine and wool into yarn.
IN2 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] IAS 41 prescribes, among other things, the accounting treatment for biological assets during the
period of growth, degeneration, production, and procreation, and for the initial measurement of agricultural

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produce at the point of harvest. It requires measurement at fair value less costs to sell from initial recognition
of biological assets up to the point of harvest, other than when fair value cannot be measured reliably on
initial recognition. However, IAS 41 does not deal with processing of agricultural produce after harvest; for
example, processing grapes into wine and wool into yarn.
IN3 [Effective prior to 1 January 2009.] There is a presumption that fair value can be measured reliably for a
biological asset. However, that presumption can be rebutted only on initial recognition for a biological asset
for which market-determined prices or values are not available and for which alternative estimates of fair
value are determined to be clearly unreliable. In such a case, IAS 41 requires an entity to measure that
biological asset at its cost less any accumulated depreciation and any accumulated impairment losses. Once
the fair value of such a biological asset becomes reliably measurable, an entity should measure it at its fair
value less estimated point-of-sale costs. In all cases, an entity should measure agricultural produce at the
point of harvest at its fair value less estimated point-of-sale costs.
IN3 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] There is a presumption that fair value can be measured reliably for a biological asset. However,
that presumption can be rebutted only on initial recognition for a biological asset for which market-determined
prices or values are not available and for which alternative estimates of fair value are determined to be clearly
unreliable. In such a case, IAS 41 requires an entity to measure that biological asset at its cost less any
accumulated depreciation and any accumulated impairment losses. Once the fair value of such a biological
asset becomes reliably measurable, an entity should measure it at its fair value less costs to sell. In all cases,
an entity should measure agricultural produce at the point of harvest at its fair value less costs to sell.
IN3 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] There is a presumption that fair value can be measured reliably for a biological
asset. However, that presumption can be rebutted only on initial recognition for a biological asset for which
quoted market prices are not available and for which alternative fair value measurements are determined to
be clearly unreliable. In such a case, IAS 41 requires an entity to measure that biological asset at its cost less
any accumulated depreciation and any accumulated impairment losses. Once the fair value of such a
biological asset becomes reliably measurable, an entity should measure it at its fair value less costs to sell. In
all cases, an entity should measure agricultural produce at the point of harvest at its fair value less costs to
sell.
IN4 [Effective prior to 1 January 2009.] IAS 41 requires that a change in fair value less estimated point-of-
sale costs of a biological asset be included in profit or loss for the period in which it arises. In agricultural
activity, a change in physical attributes of a living animal or plant directly enhances or diminishes economic
benefits to the entity. Under a transaction-based, historical cost accounting model, a plantation forestry entity
might report no income until first harvest and sale, perhaps 30 years after planting. On the other hand, an
accounting model that recognises and measures biological growth using current fair values reports changes
in fair value throughout the period between planting and harvest.
IN4 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] IAS 41 requires that a change in fair value less costs to sell of a biological asset be included in
profit or loss for the period in which it arises. In agricultural activity, a change in physical attributes of a living
animal or plant directly enhances or diminishes economic benefits to the entity. Under a transaction-based,
historical cost accounting model, a plantation forestry entity might report no income until first harvest and
sale, perhaps 30 years after planting. On the other hand, an accounting model that recognises and measures
biological growth using current fair values reports changes in fair value throughout the period between
planting and harvest.
IN5 [Effective prior to 1 January 2009.] IAS 41 does not establish any new principles for land related to
agricultural activity. Instead, an entity follows IAS 16, Property, Plant and Equipment, or IAS 40, Investment
Property, depending on which standard is appropriate in the circumstances. IAS 16 requires land to be
measured either at its cost less any accumulated impairment losses, or at a revalued amount. IAS 40
requires land that is investment property to be measured at its fair value, or cost less any accumulated
impairment losses. Biological assets that are physically attached to land (for example, trees in a plantation
forest) are measured at their fair value less estimated point-of-sale costs separately from the land.

IN5 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] IAS 41 does not establish any new principles for land related to agricultural activity. Instead, an
entity follows IAS 16 Property, Plant and Equipment or IAS 40 Investment Property, depending on which
standard is appropriate in the circumstances. IAS 16 requires land to be measured either at its cost less any
accumulated impairment losses, or at a revalued amount. IAS 40 requires land that is investment property to

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be measured at its fair value, or cost less any accumulated impairment losses. Biological assets that are
physically attached to land (for example, trees in a plantation forest) are measured at their fair value less
costs to sell separately from the land.
IN6 [Effective prior to 1 January 2009.] IAS 41 requires that an unconditional government grant related to a
biological asset measured at its fair value less estimated point-of-sale costs be recognised as income when,
and only when, the government grant becomes receivable. If a government grant is conditional, including
where a government grant requires an entity not to engage in specified agricultural activity, an entity should
recognise the government grant as income when, and only when, the conditions attaching to the government
grant are met. If a government grant relates to a biological asset measured at its cost less any accumulated
depreciation and any accumulated impairment losses, IAS 20 Accounting for Government Grants and
Disclosure of Government Assistance, is applied.
IN6 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] IAS 41 requires an unconditional government grant related to a biological asset measured at its
fair value less costs to sell to be recognised in profit or loss when, and only when, the government grant
becomes receivable. If a government grant is conditional, including when a government grant requires an
entity not to engage in specified agricultural activity, an entity should recognise the government grant in profit
or loss when, and only when, the conditions attaching to the government grant are met. If a government grant
relates to a biological asset measured at its cost less any accumulated depreciation and any accumulated
impairment losses, the entity applies IAS 20 Accounting for Government Grants and Disclosure of
Government Assistance.
IN7 IAS 41 is effective for annual financial statements covering periods beginning on or after 1 January
2003. Earlier application is encouraged.
IN8 IAS 41 does not establish any specific transitional provisions. The adoption of IAS 41 is accounted for in
accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
IN9 The illustrative examples accompanying IAS 41 provide examples of the application of the Standard.
The Basis for Conclusions summarises the Board’s reasons for adopting the requirements set out in IAS 41.

International Accounting Standard 41 Agriculture

Objective
The objective of this Standard is to prescribe the accounting treatment and disclosures related to agricultural
activity.

Scope
1 This Standard shall be applied to account for the following when they relate to agricultural activity:

a. biological assets;

b. agricultural produce at the point of harvest; and

c. goverment grants covered by paragraphs 34 and 35.

Deloitte Guidance and Links

Q&A IAS 41: 1-1 — SCOPE — BIOLOGICAL ASSETS AND AGRICULTURAL PRODUCE USED AS A
SOURCE OF FUEL FOR VERTICALLY INTEGRATED OPERATIONS

2 This Standard does not apply to:

a. land related to agricultural activity (see IAS 16 Property, Plant and Equipment and IAS 40
Investment Property); and

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b. intangible assets related to agricultural activity (see IAS 38 Intangible Assets).

Deloitte Guidance and Links

Q&A IAS 41: 2-1 — PLANT BREEDING: NEW PLANT DEVELOPMENT

3 This Standard is applied to agricultural produce, which is the harvested product of the entity’s biological
assets, only at the point of harvest. Thereafter, IAS 2 Inventories or another applicable Standard is applied.
Accordingly, this Standard does not deal with the processing of agricultural produce after harvest; for
example, the processing of grapes into wine by a vintner who has grown the grapes. While such processing
may be a logical and natural extension of agricultural activity, and the events taking place may bear some
similarity to biological transformation, such processing is not included within the definition of agricultural
activity in this Standard.
4 The table below provides examples of biological assets, agricultural produce, and products that are the
result of processing after harvest:

Products that are the result

Biological assets Agricultural produce of processing after harvest

Sheep Wool Yarn, carpet

Trees in a plantation forest Felled trees Logs, lumber

Plants Cotton Thread, clothing

Harvested cane Sugar

Dairy cattle Milk Cheese

Pigs Carcass Sausages, cured hams

Bushes Leaf Tea, cured tobacco

Vines Grapes Wine

Fruit trees Picked fruit Processed fruit

Definitions
Agriculture-related definitions
5 The following terms are used in this Standard with the meanings specified:

[Effective prior to 1 January 2009.] Agricultural activity is the management by an entity of the
biological transformation of biological assets for sale, into agricultural produce, or into additional
biological assets.

[Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph 60 for
full effective date information.] Agricultural activity is the management by an entity of the biological
transformation and harvest of biological assets for sale or for conversion into agricultural produce or
into additional biological assets.

Agricultural produce is the harvested product of the entity’s biological assets.

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A biological asset is a living animal or plant.

Biological transformation comprises the processes of growth, degeneration, production, and

procreation that cause qualitative or quantitative changes in a biological asset.

[Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph 60 for
full effective date information.] Costs to sell are the incremental costs directly attributable to the
disposal of an asset, excluding finance costs and income taxes.

A group of biological assets is an aggregation of similar living animals or plants.

Harvest is the detachment of produce from a biological asset or the cessation of a biological asset’s
life processes.

Deloitte Guidance and Links

Q&A IAS 41: 5-2 — PLANT BREEDING: SEED MULTIPLICATION

Q&A IAS 41: 5-1 — DEFINITION OF AGRICULTURAL ACTIVITIES

6 [Effective prior to 1 January 2009.] Agricultural activity covers a diverse range of activities; for example,
raising livestock, forestry, annual or perennial cropping, cultivating orchards and plantations, floriculture, and
aquaculture (including fish farming). Certain common features exist within this diversity:

a. Capability to change. Living animals and plants are capable of biological transformation;

b. Management of change. Management facilitates biological transformation by enhancing, or at

least stabilising, conditions necessary for the process to take place (for example, nutrient levels,
moisture, temperature, fertility, and light). Such management distinguishes agricultural activity
from other activities. For example, harvesting from unmanaged sources (such as ocean fishing
and deforestation) is not agricultural activity; and

c. Measurement of change. The change in quality (for example, genetic merit, density, ripeness, fat
cover, protein content, and fibre strength) or quantity (for example, progeny, weight, cubic
metres, fibre length or diameter, and number of buds) brought about by biological transformation
is measured and monitored as a routine management function.

6 [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph 60 for full
effective date information.] Agricultural activity covers a diverse range of activities; for example, raising
livestock, forestry, annual or perennial cropping, cultivating orchards and plantations, floriculture and
aquaculture (including fish farming). Certain common features exist within this diversity:

a. Capability to change. Living animals and plants are capable of biological transformation;

b. Management of change. Management facilitates biological transformation by enhancing, or at

least stabilising, conditions necessary for the process to take place (for example, nutrient levels,
moisture, temperature, fertility, and light). Such management distinguishes agricultural activity
from other activities. For example, harvesting from unmanaged sources (such as ocean fishing
and deforestation) is not agricultural activity; and

c. Measurement of change. The change in quality (for example, genetic merit, density, ripeness, fat
cover, protein content, and fibre strength) or quantity (for example, progeny, weight, cubic
metres, fibre length or diameter, and number of buds) brought about by biological transformation
or harvest is measured and monitored as a routine management function.

7 Biological transformation results in the following types of outcomes:

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a. asset changes through (i) growth (an increase in quantity or improvement in quality of an animal
or plant), (ii) degeneration (a decrease in the quantity or deterioration in quality of an animal or
plant), or (iii) procreation (creation of additional living animals or plants); or

b. production of agricultural produce such as latex, tea leaf, wool, and milk.

General definitions
8 The following terms are used in this Standard with the meanings specified:

[Effective prior to 1 January 2013.] An active market is a market where all the following conditions
exist:

a. the items traded within the market are homogeneous;

b. willing buyers and sellers can normally be found at any time; and

c. prices are available to the public.

[Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] [Deleted]

Carrying amount is the amount at which an asset is recognised in the statement of financial position.

[Effective prior to 1 January 2013.] Fair value is the amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

[Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date.
(See IFRS 13 Fair Value Measurement.)

Government grants are as defined in IAS 20 Accounting for Government Grants and Disclosure of
Government Assistance.

Deloitte Guidance and Links

IAS 41 – Agriculture

9 [Effective prior to 1 January 2013.] The fair value of an asset is based on its present location and
condition. As a result, for example, the fair value of cattle at a farm is the price for the cattle in the relevant
market less the transport and other costs of getting the cattle to that market.

Deloitte Guidance and Links

Q&A IAS 41: 9-1 — COSTS TO SELL

9 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for full
effective date information.] [Deleted]

Recognition and measurement

10 An entity shall recognise a biological asset or agricultural produce when, and only when:

a. the entity controls the asset as a result of past events;

b. it is probable that future economic benefits associated with the asset will flow to the

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entity; and

c. the fair value or cost of the asset can be measured reliably.

Deloitte Guidance and Links

Q&A IAS 41: 10-1 — SEPARATE RECOGNITION OF PRODUCE BEFORE HARVEST

Q&A IAS 41: 10-EX-1 — SEPARATE RECOGNITION OF PRODUCE BEFORE HARVEST

11 In agricultural activity, control may be evidenced by, for example, legal ownership of cattle and the
branding or otherwise marking of the cattle on acquisition, birth, or weaning. The future benefits are normally
assessed by measuring the significant physical attributes.
12 [Effective prior to 1 January 2009.] A biological asset shall be measured on initial recognition and
at each balance sheet date at its fair value less estimated point-of-sale costs, except for the case
described in paragraph 30 where the fair value cannot be measured reliably.
12 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] A biological asset shall be measured on initial recognition and at the end of each
reporting period at its fair value less costs to sell, except for the case described in paragraph 30
where the fair value cannot be measured reliably.

Deloitte Guidance and Links

Q&A IAS 41: 12-2 — MEASUREMENT OF LEASED BIOLOGICAL ASSETS

13 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. Such measurement is the cost at that date when
applying IAS 2 Inventories or another applicable Standard.

Deloitte Guidance and Links

Q&A IAS 41: 13-1 — MEASUREMENT OF HARVESTED AGRICULTURAL PRODUCE

Q&A IAS 41: 13-3 — DETERMINATION OF NET REALISABLE VALUE APPLIED TO HARVESTED
AGRICULTURAL PRODUCE

14 [Effective prior to 1 January 2009.] Point-of-sale costs include commissions to brokers and dealers,
levies by regulatory agencies and commodity exchanges, and transfer taxes and duties. Point-of-sale costs
exclude transport and other costs necessary to get assets to a market.
14 [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph 60 for
full effective date information.] [Deleted]
15 [Effective prior to 1 January 2013.] The determination of fair value for a biological asset or agricultural
produce may be facilitated by grouping biological assets or agricultural produce according to significant
attributes; for example, by age or quality. An entity selects the attributes corresponding to the attributes used
in the market as a basis for pricing.

15 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] The fair value measurement of a biological asset or agricultural produce may
be facilitated by grouping biological assets or agricultural produce according to significant attributes; for
example, by age or quality. An entity selects the attributes corresponding to the attributes used in the market
as a basis for pricing.

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16 [Effective prior to 1 January 2013.] Entities often enter into contracts to sell their biological assets or
agricultural produce at a future date. Contract prices are not necessarily relevant in determining fair value,
because fair value reflects the current market in which a willing buyer and seller would enter into a
transaction. As a result, the fair value of a biological asset or agricultural produce is not adjusted because of
the existence of a contract. In some cases, a contract for the sale of a biological asset or agricultural produce
may be an onerous contract, as defined in IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
IAS 37 applies to onerous contracts.
16 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] Entities often enter into contracts to sell their biological assets or agricultural
produce at a future date. Contract prices are not necessarily relevant in measuring fair value, because fair
value reflects the current market conditions in which market participant buyers and sellers would enter into a
transaction. As a result, the fair value of a biological asset or agricultural produce is not adjusted because of
the existence of a contract. In some cases, a contract for the sale of a biological asset or agricultural produce
may be an onerous contract, as defined in IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
IAS 37 applies to onerous contracts.
17 [Effective prior to 1 January 2009.] If an active market exists for a biological asset or agricultural produce,
the quoted price in that market is the appropriate basis for determining the fair value of that asset. If an entity
has access to different active markets, the entity uses the most relevant one. For example, if an entity has
access to two active markets, it would use the price existing in the market expected to be used.

17 [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph 60 for
full effective date information.] If an active market exists for a biological asset or agricultural produce in its
present location and condition, the quoted price in that market is the appropriate basis for determining the fair
value of that asset. If an entity has access to different active markets, the entity uses the most relevant one.
For example, if an entity has access to two active markets, it would use the price existing in the market
expected to be used.
17 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] [Deleted]
18 [Effective prior to 1 January 2009.] If an active market does not exist, an entity uses one or more of the
following, when available, in determining fair value:

a. the most recent market transaction price, provided that there has not been a significant change in
economic circumstances between the date of that transaction and the balance sheet date;

b. market prices for similar assets with adjustment to reflect differences; and

c. sector benchmarks such as the value of an orchard expressed per export tray, bushel, or
hectare, and the value of cattle expressed per kilogram of meat.

18 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] If an active market does not exist, an entity uses one or more of the following, when available, in
determining fair value:

a. the most recent market transaction price, provided that there has not been a significant change in
economic circumstances between the date of that transaction and the end of the reporting period;

b. market prices for similar assets with adjustment to reflect differences; and

c. sector benchmarks such as the value of an orchard expressed per export tray, bushel, or
hectare, and the value of cattle expressed per kilogram of meat.

18 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] [Deleted]
19 [Effective prior to 1 January 2013.] In some cases, the information sources listed in paragraph 18 may
suggest different conclusions as to the fair value of a biological asset or agricultural produce. An entity

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considers the reasons for those differences, in order to arrive at the most reliable estimate of fair value within
a relatively narrow range of reasonable estimates.
19 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] [Deleted]
20 [Effective prior to 1 January 2009.] In some circumstances, market-determined prices or values may not
be available for a biological asset in its present condition. In these circumstances, an entity uses the present
value of expected net cash flows from the asset discounted at a current market-determined pre-tax rate in
determining fair value.
20 [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph 60 for
full effective date information.] In some circumstances, market-determined prices or values may not be
available for a biological asset in its present condition. In these circumstances, an entity uses the present
value of expected net cash flows from the asset discounted at a current market-determined rate in
determining fair value.

20 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] [Deleted]

21 [Effective prior to 1 January 2009.] The objective of a calculation of the present value of expected net
cash flows is to determine the fair value of a biological asset in its present location and condition. An entity
considers this in determining an appropriate discount rate to be used and in estimating expected net cash
flows. The present condition of a biological asset excludes any increases in value from additional biological
transformation and future activities of the entity, such as those related to enhancing the future biological
transformation, harvesting, and selling.
21 [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph 60 for
full effective date information.] The objective of a calculation of the present value of expected net cash flows
is to determine the fair value of a biological asset in its present location and condition. An entity considers this
in determining an appropriate discount rate to be used and in estimating expected net cash flows. In
determining the present value of expected net cash flows, an entity includes the net cash flows that market
participants would expect the asset to generate in its most relevant market.

Deloitte Guidance and Links

Q&A IAS 41: 21-1 — DISCOUNT RATE ASSUMPTION USED IN FAIR VALUE CALCULATIONS

21 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] [Deleted]
22 An entity does not include any cash flows for financing the assets, taxation, or re-establishing biological
assets after harvest (for example, the cost of replanting trees in a plantation forest after harvest).
23 [Effective prior to 1 January 2013.] In agreeing an arm’s length transaction price, knowledgeable, willing
buyers and sellers consider the possibility of variations in cash flows. It follows that fair value reflects the
possibility of such variations. Accordingly, an entity incorporates expectations about possible variations in
cash flows into either the expected cash flows, or the discount rate, or some combination of the two. In
determining a discount rate, an entity uses assumptions consistent with those used in estimating the
expected cash flows, to avoid the effect of some assumptions being double-counted or ignored.
23 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] [Deleted]

24 [Effective prior to 1 January 2009.] Cost may sometimes approximate fair value, particularly when:

a. little biological transformation has taken place since initial cost incurrence (for example, for fruit
tree seedlings planted immediately prior to a balance sheet date); or

b. the impact of the biological transformation on price is not expected to be material (for example,
for the initial growth in a 30-year pine plantation production cycle).

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24 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] Cost may sometimes approximate fair value, particularly when:

a. little biological transformation has taken place since initial cost incurrence (for example, for fruit
tree seedlings planted immediately prior to the end of a reporting period); or

b. the impact of the biological transformation on price is not expected to be material (for example,
for the initial growth in a 30-year pine plantation production cycle).

25 [Effective prior to 1 January 2013.] Biological assets are often physically attached to land (for example,
trees in a plantation forest). There may be no separate market for biological assets that are attached to the
land but an active market may exist for the combined assets, that is, for the biological assets, raw land, and
land improvements, as a package. An entity may use information regarding the combined assets to
determine fair value for the biological assets. For example, the fair value of raw land and land improvements
may be deducted from the fair value of the combined assets to arrive at the fair value of biological assets.
25 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph 61 for
full effective date information.] Biological assets are often physically attached to land (for example, trees in a
plantation forest). There may be no separate market for biological assets that are attached to the land but an
active market may exist for the combined assets, that is, for the biological assets, raw land, and land
improvements, as a package. An entity may use information regarding the combined assets to measure the
fair value of the biological assets. For example, the fair value of raw land and land improvements may be
deducted from the fair value of the combined assets to arrive at the fair value of biological assets.

Gains and losses

26 [Effective prior to 1 January 2009.] A gain or loss arising on initial recognition of a biological
asset at fair value less estimated point-of-sale costs and from a change in fair value less estimated
point-of-sale costs of a biological asset shall be included in profit or loss for the period in which it
arises.
26 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] A gain or loss arising on initial recognition of a biological asset at fair value less costs to
sell and from a change in fair value less costs to sell of a biological asset shall be included in profit
or loss for the period in which it arises.
27 [Effective prior to 1 January 2009.] A loss may arise on initial recognition of a biological asset, because
estimated point-of-sale costs are deducted in determining fair value less estimated point-of-sale costs of a
biological asset. A gain may arise on initial recognition of a biological asset, such as when a calf is born.
27 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] A loss may arise on initial recognition of a biological asset, because costs to sell are deducted in
determining fair value less costs to sell of a biological asset. A gain may arise on initial recognition of a
biological asset, such as when a calf is born.

28 [Effective prior to 1 January 2009.] A gain or loss arising on initial recognition of agricultural
produce at fair value less estimated point-of-sale costs should be included in profit or loss for the
period in which it arises.

28 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] A gain or loss arising on initial recognition of agricultural produce at fair value less costs
to sell shall be included in profit or loss for the period in which it arises.
29 A gain or loss may arise on initial recognition of agricultural produce as a result of harvesting.

Inability to measure fair value reliably

30 [Effective prior to 1 January 2009.] There is a presumption that fair value can be measured
reliably for a biological asset. However, that presumption can be rebutted only on initial recognition
for a biological asset for which market-determined prices or values are not available and for which
alternative estimates of fair value are determined to be clearly unreliable. In such a case, that
biological asset shall be measured at its cost less any accumulated depreciation and any

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accumulated impairment losses. Once the fair value of such a biological asset becomes reliably
measurable, an entity shall measure it at its fair value less estimated point-of-sale costs. Once a non-
current biological asset meets the criteria to be classified as held for sale (or is included in a disposal
group that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, it is presumed that fair value can be measured reliably.
30 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] There is a presumption that fair value can be measured reliably for a biological asset.
However, that presumption can be rebutted only on initial recognition for a biological asset for which
market-determined prices or values are not available and for which alternative estimates of fair value
are determined to be clearly unreliable. In such a case, that biological asset shall be measured at its
cost less any accumulated depreciation and any accumulated impairment losses. Once the fair value
of such a biological asset becomes reliably measurable, an entity shall measure it at its fair value less
costs to sell. Once a non-current biological asset meets the criteria to be classified as held for sale
(or is included in a disposal group that is classified as held for sale) in accordance with IFRS 5 Non-
current Assets Held for Sale and Discontinued Operations, it is presumed that fair value can be
measured reliably.
30 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph
61 for full effective date information.] There is a presumption that fair value can be measured reliably
for a biological asset. However, that presumption can be rebutted only on initial recognition for a
biological asset for which quoted market prices are not available and for which alternative fair value
measurements are determined to be clearly unreliable. In such a case, that biological asset shall be
measured at its cost less any accumulated depreciation and any accumulated impairment losses.
Once the fair value of such a biological asset becomes reliably measurable, an entity shall measure it
at its fair value less costs to sell. Once a non-current biological asset meets the criteria to be
classified as held for sale (or is included in a disposal group that is classified as held for sale) in
accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, it is
presumed that fair value can be measured reliably.
31 [Effective prior to 1 January 2009.] The presumption in paragraph 30 can be rebutted only on initial
recognition. An entity that has previously measured a biological asset at its fair value less estimated point-of-
sale costs continues to measure the biological asset at its fair value less estimated point-of-sale costs until
disposal.

31 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] The presumption in paragraph 30 can be rebutted only on initial recognition. An entity that has
previously measured a biological asset at its fair value less costs to sell continues to measure the biological
asset at its fair value less costs to sell until disposal.
32 [Effective prior to 1 January 2009.] In all cases, an entity measures agricultural produce at the point of
harvest at its fair value less estimated point-of-sale costs. This Standard reflects the view that the fair value of
agricultural produce at the point of harvest can always be measured reliably.
32 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] In all cases, an entity measures agricultural produce at the point of harvest at its fair value less
costs to sell. This Standard reflects the view that the fair value of agricultural produce at the point of harvest
can always be measured reliably.
33 In determining cost, accumulated depreciation and accumulated impairment losses, an entity considers
IAS 2, IAS 16 and IAS 36 Impairment of Assets.

Government grants
34 [Effective prior to 1 January 2009.] An unconditional government grant related to a biological
asset measured at its fair value less estimated point-of-sale costs shall be recognised as income
when, and only when, the government grant becomes receivable.
34 [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph
60 for full effective date information.] An unconditional government grant related to a biological asset
measured at its fair value less costs to sell shall be recognised in profit or loss when, and only when,
the government grant becomes receivable.
35 [Effective prior to 1 January 2009.] If a government grant related to a biological asset measured at

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its fair value less estimated point-of-sale costs is conditional, including where a government grant
requires an entity not to engage in specified agricultural activity, an entity shall recognise the
government grant as income when, and only when, the conditions attaching to the government grant
are met.
35 [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph
60 for full effective date information.] 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 to engage in specified agricultural activity, an entity shall recognise the government grant in
profit or loss when, and only when, the conditions attaching to the government grant are met.
36 [Effective prior to 1 January 2009.] Terms and conditions of government grants vary. For example, a
government grant may require an entity to farm in a particular location for five years and require the entity to
return all of the government grant if it farms for less than five years. In this case, the government grant is not
recognised as income until the five years have passed. However, if the government grant allows part of the
government grant to be retained based on the passage of time, the entity recognises the government grant
as income on a time proportion basis.
36 [Effective for annual reporting periods beginning on or after 1 January 2009. Refer to paragraph 60 for
full effective date information.] Terms and conditions of government grants vary. For example, a grant may
require an entity to farm in a particular location for five years and require the entity to return all of the grant if it
farms for a period shorter than five years. In this case, the grant is not recognised in profit or loss until the five
years have passed. However, if the terms of the grant allow part of it to be retained according to the time that
has elapsed, the entity recognises that part in profit or loss as time passes.
37 If a government grant relates to a biological asset measured at its cost less any accumulated
depreciation and any accumulated impairment losses (see paragraph 30), IAS 20 is applied.
38 [Effective prior to 1 January 2009.] This Standard requires a different treatment from IAS 20, if a
government grant relates to a biological asset measured at its fair value less estimated point-of-sale costs or
a government grant requires an entity not to engage in specified agricultural activity. IAS 20 is applied only to
a government grant related to a biological asset measured at its cost less any accumulated depreciation and
any accumulated impairment losses.
38 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] This Standard requires a different treatment from IAS 20, if a government grant relates to a
biological asset measured at its fair value less costs to sell or a government grant requires an entity not to
engage in specified agricultural activity. IAS 20 is applied only to a government grant related to a biological
asset measured at its cost less any accumulated depreciation and any accumulated impairment losses.

Disclosure
39 [Deleted]

General
40 [Effective prior to 1 January 2009.] An entity shall disclose the aggregate gain or loss arising
during the current period on initial recognition of biological assets and agricultural produce and from
the change in fair value less estimated point-of-sale costs of biological assets.

Deloitte Guidance and Links

Q&A IAS 1: 57-1 — PRESENTATION OF IMMATURE AGRICULTURAL PRODUCE IN THE BALANCE

SHEET

40 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] An entity shall disclose the aggregate gain or loss arising during the current period on
initial recognition of biological assets and agricultural produce and from the change in fair value less
costs to sell of biological assets.
41 An entity shall provide a description of each group of biological assets.

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42 The disclosure required by paragraph 41 may take the form of a narrative or quantified description.
43 An entity is encouraged to provide a quantified description of each group of biological assets,
distinguishing between consumable and bearer biological assets or between mature and immature biological
assets, as appropriate. For example, an entity may disclose the carrying amounts of consumable biological
assets and bearer biological assets by group. An entity may further divide those carrying amounts between
mature and immature assets. These distinctions provide information that may be helpful in assessing the
timing of future cash flows. An entity discloses the basis for making any such distinctions.
44 Consumable biological assets are those that are to be harvested as agricultural produce or sold as
biological assets. Examples of consumable biological assets are livestock intended for the production of
meat, livestock held for sale, fish in farms, crops such as maize and wheat, and trees being grown for lumber.
Bearer biological assets are those other than consumable biological assets; for example, livestock from which
milk is produced, grape vines, fruit trees, and trees from which firewood is harvested while the tree remains.
Bearer biological assets are not agricultural produce but, rather, are self-regenerating.

45 Biological assets may be classified either as mature biological assets or immature biological assets.
Mature biological assets are those that have attained harvestable specifications (for consumable biological
assets) or are able to sustain regular harvests (for bearer biological assets).
46 If not disclosed elsewhere in information published with the financial statements, an entity shall
describe:

a. the nature of its activities involving each group of biological assets; and

b. non-financial measures or estimates of the physical quantities of:

i. each group of the entity’s biological assets at the end of the period; and

ii. output of agricultural produce during the period.

47 [Effective prior to 1 January 2013.] An entity shall disclose the methods and significant
assumptions applied in determining the fair value of each group of agricultural produce at the point
of harvest and each group of biological assets.
47 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph
61 for full effective date information.] [Deleted]
48 [Effective prior to 1 January 2009.] An entity shall disclose the fair value less estimated point-of-
sale costs of agricultural produce harvested during the period, determined at the point of harvest.

48 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] An entity shall disclose the fair value less costs to sell of agricultural produce harvested
during the period, determined at the point of harvest.
48 [Effective for annual reporting periods beginning on or after 1 January 2013. Refer to paragraph
61 for full effective date information.] [Deleted]

49 An entity shall disclose:

a. the existence and carrying amounts of biological assets whose title is restricted, and the
carrying amounts of biological assets pledged as security for liabilities;

b. the amount of commitments for the development or acquisition of biological assets; and

c. financial risk management strategies related to agricultural activity.

50 [Effective prior to 1 January 2009.] An entity shall present a reconciliation of changes in the
carrying amount of biological assets between the beginning and the end of the current period. The
reconciliation shall include:

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a. the gain or loss arising from changes in fair value less estimated point-ot-sale costs;

b. increases due to purchases;

c. decreases attributable to sales and biological assets classified as held for sale (or
included in a disposal group that is classified as held for sale) in accordance with IFRS 5;

d. decreases due to harvest;

e. increases resulting from business combinations;

f. net exchange differences arising on the translation of financial statements into a different
presentation currency, and on the translation of a foreign operation into the presentation
currency of the reporting entity; and

g. other changes.

50 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] An entity shall present a reconciliation of changes in the carrying amount of biological
assets between the beginning and the end of the current period. The reconciliation shall include:

a. the gain or loss arising from changes in fair value less costs to sell;

b. increases due to purchases;

c. decreases attributable to sales and biological assets classified as held for sale (or
included in a disposal group that is classified as held for sale) in accordance with IFRS 5;

d. decreases due to harvest;

e. increases resulting from business combinations;

f. net exchange differences arising on the translation of financial statements into a different
presentation currency, and on the translation of a foreign operation into the presentation
currency of the reporting entity; and

g. other changes.

51 [Effective prior to 1 January 2009.] The fair value less estimated point-of-sale costs of a biological asset
can change due to both physical changes and price changes in the market. Separate disclosure of physical
and price changes is useful in appraising current period performance and future prospects, particularly when
there is a production cycle of more than one year. In such cases, an entity is encouraged to disclose, by
group or otherwise, the amount of change in fair value less estimated point-of-sale costs included in profit or
loss due to physical changes and due to price changes. This information is generally less useful when the
production cycle is less than one year (for example, when raising chickens or growing cereal crops).
51 [Effective for annual reporting periods beginning on or after 1 January 2009. Earlier application is
permitted.] The fair value less costs to sell of a biological asset can change due to both physical changes and
price changes in the market. Separate disclosure of physical and price changes is useful in appraising current
period performance and future prospects, particularly when there is a production cycle of more than one year.
In such cases, an entity is encouraged to disclose, by group or otherwise, the amount of change in fair value
less costs to sell included in profit or loss due to physical changes and due to price changes. This information
is generally less useful when the production cycle is less than one year (for example, when raising chickens
or growing cereal crops).
52 Biological transformation results in a number of types of physical change—growth, degeneration,
production, and procreation, each of which is observable and measurable. Each of those physical changes
has a direct relationship to future economic benefits. A change in fair value of a biological asset due to
harvesting is also a physical change.
53 Agricultural activity is often exposed to climatic, disease and other natural risks. If an event occurs that

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gives rise to a material item of income or expense, the nature and amount of that item are disclosed in
accordance with IAS 1 Presentation of Financial Statements. Examples of such an event include an outbreak
of a virulent disease, a flood, a severe drought or frost, and a plague of insects.

Additional disclosures for biological assets where fair value cannot be measured reliably
54 If an entity measures biological assets at their cost less any accumulated depreciation and any
accumulated impairment losses (see paragraph 30) at the end of the period, the entity shall disclose
for such biological assets:

a. a description of the biological assets;

b. an explanation of why fair value cannot be measured reliably;

c. if possible, the range of estimates within which fair value is highly likely to lie;

d. the depreciation method used;

e. the useful lives or the depreciation rates used; and

f. the gross carrying amount and the accumulated depreciation (aggregated with
accumulated impairment losses) at the beginning and end of the period.

55 If, during the current period, an entity measures biological assets at their cost less any
accumulated depreciation and any accumulated impairment losses (see paragraph 30), an entity shall
disclose any gain or loss recognised on disposal of such biological assets and the reconciliation
required by paragraph 50 shall disclose amounts related to such biological assets separately. In
addition, the reconciliation shall include the following amounts included in profit or loss related to
those biological assets:

a. impairment losses;

b. reversals of impairment losses; and

c. depreciation.

56 If the fair value of biological assets previously measured at their cost less any accumulated
depreciation and any accumulated impairment losses becomes reliably measurable during the
current period, an entity shall disclose for those biological assets:

a. a description of the biological assets;

b. an explanation of why fair value has become reliably measurable; and

c. the effect of the change.

Government grants
57 An entity shall disclose the following related to agricultural activity covered by this Standard:

a. the nature and extent of government grants recognised in the financial statements;

b. unfulfilled conditions and other contingencies attaching to government grants; and

c. significant decreases expected in the level of government grants.

Effective date and transition

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58 This Standard becomes operative for annual financial statements covering periods beginning on or after
1 January 2003. Earlier application is encouraged. If an entity applies this Standard for periods beginning
before 1 January 2003, it shall disclose that fact.
59 This Standard does not establish any specific transitional provisions. The adoption of this Standard is
accounted for in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
60 Paragraphs 5, 6, 17, 20 and 21 were amended and paragraph 14 deleted by Improvements to IFRSs
issued in May 2008. An entity shall apply those amendments prospectively for annual periods beginning on or
after 1 January 2009. Earlier application is permitted. If an entity applies the amendments for an earlier period
it shall disclose that fact.
61 IFRS 13, issued in May 2011, amended paragraphs 8, 15, 16, 25 and 30 and deleted paragraphs 9, 17–
21, 23, 47 and 48. An entity shall apply those amendments when it applies IFRS 13.
________________________________________________
1 effective date 1 January 2009
2 effective date 1 January 2009
3 effective date 1 January 2013 (earlier application permitted)
4 effective date 1 January 2013 (earlier application permitted)
5 effective date 1 January 2013 (earlier application permitted)

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This accounting manual provides comprehensive guidance; however, the manual does not address all possible fact
patterns and the guidance is subject to change. Consult a Deloitte Touche Tohmatsu professional regarding your specific
issues and questions.
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