FAIR VALUE AND HISTORIC COST ACCOUN

FAIR VALUE AND HISTORIC COST ACCOUNTING OF BIOLOGICAL ASSETS
VALOR RAZONABLE VERSUS COSTE HISTÓRICO DE ACTIVOS BIOLÓGICOS
ABSTRACT
This paper starts out to analyse the recent debate about the convenience of the move of
accounting from historical cost toward the fair-value principle. In spite that there is no
unanimous opinion on the advantages and drawbacks of its implementation with respect
to historic cost, in the existing previous literature. on agricultural accounting prevails a
claim against the requirementof IAS 41 of fair valuation for biological assets.
This research provided empirical evidence that the use offair value principle for
biological assets provides significant different valuations of assets and revenues with
respect to historic cost, but does neither disclose significant differences in profits, nor
increase volatility, nor bring about differentprofitability and accounting manipulation.
Provided that historic cost is a complex valuation method for biological assets, it seems
that fair value is an interesting tool for the predominant small holdings in the
agricultural sector inthe European Union.
Keywords: agricultural accounting, fair value,historic cost, biological assets.