Abstract:
The International Accounting Standard IAS 41 – Agriculture
prescribes accounting treatment, financial sheet drawing and information
related to biological assets and agricultural activities from the harvesting
point. This standard does not treat the processing of produce obtained after
harvesting, because this process is described by IAS 2 – Stoks.International
accounting standard-IAS 41-Agriculture does not contain specific
information related to how often one should evaluate biological assets,
deducing that the evaluation must be conducted on each closing date,
because there are no existent regulations to stipulate a less frequent
evaluation of biological assets. This standard presents the general idea that
the fair value can be realistically estimated by using deductive hierarchy,
which this article will debate, for a better understanding of initial evaluation
and consecutive evaluation of biological assets. IAS 41 is treating the
management of biological assets: increasing the agricultural output, logging,
plant cultivation; horticulture and aquaculture. The biological alteration is
the process of growing, ageing, production and procreation of biological
assets; these alteration lead to new agricultural produce, or transformation
of other biological assets. In addition, IAS 41 does not contain any specific
information referring how often one should estimate the biological assets. We
can conclude that that the estimation must be conducted on each closure,
because the standard does not state any information on how frequent the
estimation must be run. As explanation, IASB stated the availability of fair
values on relative expected costs, and the consistent progress of biological
transformations. In the case of biological assets or agricultural produce that
are similar, IAS 41 allows grouping them in order to simplify the fair value
estimation. The relevant characteristics for grouping the assets are: nature,
naturalness, consumption possibility, and quality and production capacity.
