The General Rules for Agricultural Produce Using US GAAP and IFRS

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Review and Discuss the General Rules for Agricultural Produce Using US GAAP and IFRS Under International Accounting Standard (IAS) 41, we presume fair value can be reliably measured for a biological asset, or a living animal or plant, and IAS 41 requires measurement at fair value less costs to sell (FVLCTS) from initial recognition of biological assets up to the point of harvest. The only expectation to the presumption is when initial recognition for a biological asset for which quoted market prices are not available as well as for which alternative fair value measurements are determined to be clearly unreliable. Under this situation, IAS 41 requires an entity to measure that biological asset at its cost less any accumulated depreciation and any accumulated impairment losses. After the fair value of such a biological asset becomes reliably measurable, the entity should measure the asset at its fair value less costs to sell (FVLCTS). Additionally, biological assets that are physically attached to land are measured at their FVLCTS separately from the land. Furthermore, an entity shall provide information related to biological assets, such as a description of each group of biological assets, the basis for making any such distinctions, and the nature of its activities involving each group of biological assets. For question number three, we use fair value less costs to sell (net realizable value) to value the inventory of biological assets. Under US GAAP, growing crops and developing animals shall be valued at the lower of cost or market (LCM); animals available and held for sale and harvested crops can be reported by this approach, too. These two items can also be valued at sales price less estimated costs of disposal, if all the following conditions exist, according to the FASB Accounting Standards Codification: •The product has a reliable, readily determinable, and realizable market price. •The product has relatively insignificant and predictable costs of...
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