152 Chapter 29 Paper F7 Agriculture September/December 2016 in this case, the asset should be measured at cost less accumulated depreciation and impairment losses but the entity must still measure all of its other biological assets at fair value less costs to sell and if circumstances change and fair value becomes reliably measurable, a switch to fair value less costs to sell is required guidance on the measurement of fair value best measure is “quoted market price in an active market” if no active market, a market–based price such as the most recent market price for that type (or similar) asset if market–based prices not available, the net present value of related cash flows from that asset, discounted at the entity’s current cost of capital in rare circumstances, cost may be taken as fair value where there has been little or no change to the biological asset since acquisition or where such change is not likely to have a material affect on value the fair value of a biological asset is based on current prices and is not reflective of actual prices agreed in binding sales contracts requiring delivery at some time in the future sundry points change in fair value of biological assets is part due to physical change (asset is one year older) and part due to market price change separate disclosure of the two elements is encouraged but not required fair value measurement stops at harvest. After that, IAS on inventory applies agricultural land is accounted for under IAS on PPE but agricultural assets attached to the land (for example fruit trees) are measured separately from the land intangible agricultural assets (for example milk quotas) are accounted for under IAS intangible assets government grants unconditionally received in respect of biological assets measured at fair value less costs to sell are accounted for as income in the period when the grant is receivable but if the grant is conditional, it shall be recognised as income only when the conditions have been met this includes grants receivable where an entity is required NOT to engage in agricultural activities
152 Chapter 29 Paper F7 Agriculture September/December 2016 in this case, the asset should be measured at cost less accumulated depreciation and impairment losses but the entity must still measure all of its other biological assets at fair value less costs to sell and if circumstances change and fair value becomes reliably measurable, a switch to fair value less costs to sell is required guidance on the measurement of fair value best measure is “quoted market price in an active market” if no active market, a market–based price such as the most recent market price for that type (or similar) asset if market–based prices not available, the net present value of related cash flows from that asset, discounted at the entity’s current cost of capital in rare circumstances, cost may be taken as fair value where there has been little or no change to the biological asset since acquisition or where such change is not likely to have a material affect on value the fair value of a biological asset is based on current prices and is not reflective of actual prices agreed in binding sales contracts requiring delivery at some time in the future sundry points change in fair value of biological assets is part due to physical change (asset is one year older) and part due to market price change separate disclosure of the two elements is encouraged but not required fair value measurement stops at harvest. After that, IAS on inventory applies agricultural land is accounted for under IAS on PPE but agricultural assets attached to the land (for example fruit trees) are measured separately from the land intangible agricultural assets (for example milk quotas) are accounted for under IAS intangible assets government grants unconditionally received in respect of biological assets measured at fair value less costs to sell are accounted for as income in the period when the grant is receivable but if the grant is conditional, it shall be recognised as income only when the conditions have been met this includes grants receivable where an entity is required NOT to engage in agricultural activities
ACCA_F7_S16_Notes.docx