Government Accounting &
Accounting for Non-Profit
Organizations
Zeus Vernon B. Millan
Agriculture
Chapter 8
Agricultural Activity
Agricultural Activity is the management by an entity
of the biological transformation and harvest of
biological assets for sale, including exchange or
non-exchange transactions, or for conversion into
agricultural produce, or into additional biological
assets.
1
Common Features of agricultural
activities
a. Capability to change
b. Management of change
c. Measurement of change
2
Definitions
• Biological Asset – is a living animal or plant
• Agricultural Produce – is the harvested product of
the entity’s biological assets.
3
Biological Assets
Agricultural produce
Inventory
Trees in a plantation
forest
Felled Trees
Logs, Lumber
Plants
Harvested cane
Sugar
Dairy cattle
Corn
Corn Starch
Sheep
Cotton
Clothing
Pigs
Milk
Cheese
Bushes
Wool
Yarn, Carpet
Vines
Carcass
Ham
Fruit trees
Leaf
Tea
Grapes
Wine
Picked fruit
Processed fruit
4
Measurement
• Biological assets - initially and subsequently measured
at fair value less costs to sell. Gain or loss arising from
measurement are recognized in surplus or deficit.
• Biological assets whose fair value cannot be reliably
determined on initial recognition are initially measured at
cost and subsequently measured at cost less
accumulated depreciation and accumulated impairment
losses.
• Agricultural produce - initially measured at fair value
less costs to sell at the point of harvest.
5
Determination of Fair value
If there are more than one active markets, the
entity shall use the price in the market expected to
be used.
6
Determination of Fair value
If there is no active market, the entity shall
estimate the market price based on one of the
following:
• Most recent market transaction price
• Market prices for similar assets with adjustment to
reflect differences
• Sector benchmarks
• Present value of expected net cash flows from the
asset.
7
Disclosures
• Consumable and Bearer biological assets
 Consumable Biological Assets – are those that are to be
harvested as agricultural produce or to be sold or distributed as
biological assets.
 Bearer Biological Assets – are those that are self-generating and
are used repeatedly for more than one year.
• Mature and immature biological assets
 Mature Biological Assets – are those that have attained
harvestable specifications or are able to sustain regular harvests.
• The amount of change in fair value less costs to sell due to
physical changes and due to price changes.
8
END