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Biological Asset Insights and Examples

Biological assets are living assets owned by a business, such as trees, animals, or cannabis plants. The IAS 41 accounting standard requires biological assets to be measured at fair value less selling costs on the balance sheet. Examples of biological assets include livestock, crops, grapevines, cannabis plants, and trees bearing fruits. Cannabis companies list biological assets like cannabis on their balance sheets as a significant current asset, as their primary operations involve growing and selling cannabis. Biological assets are particularly important for farmers and businesses that rely on selling living goods.

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51 views5 pages

Biological Asset Insights and Examples

Biological assets are living assets owned by a business, such as trees, animals, or cannabis plants. The IAS 41 accounting standard requires biological assets to be measured at fair value less selling costs on the balance sheet. Examples of biological assets include livestock, crops, grapevines, cannabis plants, and trees bearing fruits. Cannabis companies list biological assets like cannabis on their balance sheets as a significant current asset, as their primary operations involve growing and selling cannabis. Biological assets are particularly important for farmers and businesses that rely on selling living goods.

Uploaded by

Eira Shane
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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What are Biological Assets?

Biological Assets are assets that are living – for example, trees, animals, or
cannabis. The balance sheet breaks down a company’s assets at a given point
in time, classifying them by type and attributing a value to them. The
International Accounting Standard 41 (IAS 41) states that a biological asset is
any living plant or animal owned by the business, and they are typically
measured at fair value minus selling costs.

 
 

For example, livestock such as goats, cows, sheep, pigs, and fish are all
considered biological assets. Biological assets also include crops grown by
farmers – e.g., corn, tomatoes – as well as grapevines, cannabis, trees, and any
produce coming from trees, such as apples.

Cannabis Stocks

Cannabis Stocks have gained increased awareness due to the listing of


cannabis companies in public stock exchanges. With shares in the public
market, they are required by regulation to periodically release their financial
statements. This has given the general public access to their Income
Statements, Statements of Financial Position, and Cash Flow Statements.

A significant portion of the current assets owned by these companies is


biological assets (cannabis), which is typically their primary resource for profit-
generating operations. Below is an example of Canopy Growth Corporation’s
balance sheet, and highlighted is their Biological Asset holdings.

 
Canopy Growth Corporation Statement of Financial Position

Other Industries that are known for large amounts of biological assets are:

 Paper and Forest Products (Trees)


 Dairy (Cows)
 Agriculture (Crops)
 Meat (Grazing)
 BioFuel (Energy Crops – such as Soybean)

The Nature of Biological Assets

Biological assets can be held and accounted for by any business owner.
However, because of their nature, they are, typically, of the utmost importance
to farmers or any individuals whose primary source of profit comes from
growing, selling, and shipping such goods.

Biological assets, because they are living or have an active component that
makes them difficult to maintain, are constantly under the threat of change,
both qualitatively and quantitatively. It simply means that plants, animals, and
the living things they produce (such as hens producing eggs or cows
producing milk) have a period of time where they must grow or be produced,
a useful period during which they can be harvested, and a limited amount of
time during which they can be moved and sold before they rot, decay, or
otherwise become useless to consumers.

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