IFRS – IAS 41: Agriculture
The International Accounting Standards Committee (IASC) released International Accounting Standard 41 (IAS 41) to address the topic of accounting for Agriculture activity.
As there exist a transformation process during the development of living plants and animals into harvested product, this development should be reflected in the financial statements of an entity. At the point of harvesting the product, one should record it at the fair market value minus selling costs. Any gain or loss on this should be reported in earnings for the period. As there are open markets for most commodities, the underlying assumption is that market value is easily estimable. If this is not possible, the asset is measured at cost minus accumulated depreciation and impairment losses. The standard further details the intricacies of the valuation of these agriculture assets in special circumstances.
IAS are principles based standards, rather than strict rules based standards that govern international accounting. IAS standards differ from IFRS standards in that they were introduced prior to 2001, whereas IFRS were produced after this date by the IASB, or the International Accounting Standards Board. When determining the hierarchy of these, the IAS is considered to be the building blocks in which the newer and more relevant IFRS are founded and therefore IFRS is more authoritative when these conflict.
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