Biological Asset Defintion 1 
BIOLOGICAL ASSETS AND AGRICULTURAL PRODUCE
DEFINITION
What is an agricultural activity? Using the Biological assets are living plant and animals in a farm.
Transform them into agricultural produce for sale- harvested product like fruits, vegetable, milk, meat.
The following conditions should be fulfilled. Capable of biological transformation
Management of biological transformation
Measurement of biological transformation
RECOGNITION
UNDER ASPE:
CICA HB 3031 states biological assets and agricultural produced are recognised at cost and subsequent measurement using LCNRV principle. The difference in initial value and NRV is recognized as gain/loss in P&L
UNDER IFRS
Biological assets- IAS 41-IFRS
Agricultural produce IAS 2_IFRS
Biological assets are recognized initially and at the reporting date measured at fair value less cost to sell.
For most of the biological assets fair market value is readily available as there is an active market.
The products are homogeneous, and the price is fixed by forced of demand and supply.
But if the fair value cannot be identified in its current condition, then present value of expected cash flows should be used.
For example there will be market for fully grown fish, where we can find the fair market value.
But if the fish is half grown, where there is no market and if we need to determine the fair value,
The fair value of the half grown fish =
Present value of (Future cash inflows from fully grown-outflows required to bring to full grown)
Include only direct cash outflows.
Cash inflows are the price of the agricultural produce in the market
Cash outflows are feed, fertilizer and transport to the market.
What are the stages of revenue recognition?
Initial acquisition at cost. Cost Changes –due to growth or shrinkage or reproduction of offshoot
Initial gain/loss on agricultural produce: (fair value-cost to sell) - cost of the agricultural produce
Cost of the agricultural produce:
Fair value-less cost to sell- biological
DEFINITION
What is an agricultural activity? Using the Biological assets are living plant and animals in a farm.
Transform them into agricultural produce for sale- harvested product like fruits, vegetable, milk, meat.
The following conditions should be fulfilled. Capable of biological transformation
Management of biological transformation
Measurement of biological transformation
RECOGNITION
UNDER ASPE:
CICA HB 3031 states biological assets and agricultural produced are recognised at cost and subsequent measurement using LCNRV principle. The difference in initial value and NRV is recognized as gain/loss in P&L
UNDER IFRS
Biological assets- IAS 41-IFRS
Agricultural produce IAS 2_IFRS
Biological assets are recognized initially and at the reporting date measured at fair value less cost to sell.
For most of the biological assets fair market value is readily available as there is an active market.
The products are homogeneous, and the price is fixed by forced of demand and supply.
But if the fair value cannot be identified in its current condition, then present value of expected cash flows should be used.
For example there will be market for fully grown fish, where we can find the fair market value.
But if the fish is half grown, where there is no market and if we need to determine the fair value,
The fair value of the half grown fish =
Present value of (Future cash inflows from fully grown-outflows required to bring to full grown)
Include only direct cash outflows.
Cash inflows are the price of the agricultural produce in the market
Cash outflows are feed, fertilizer and transport to the market.
What are the stages of revenue recognition?
Initial acquisition at cost. Cost Changes –due to growth or shrinkage or reproduction of offshoot
Initial gain/loss on agricultural produce: (fair value-cost to sell) - cost of the agricultural produce
Cost of the agricultural produce:
Fair value-less cost to sell- biological