Taking the fair value minus point-of-sale costs as standard, IASB advanced the idea that
the asset’s fair value outbalances the point-of-sale costs. If this idea is rejected, and the pointof-
sale costs are higher than the fair value, then the difference between the two is negative.
Whereas the balance sheet does not allow negative values, the biological asset will be
registered in the balance sheet as null – only if the company has no onerous contract. If the
asset comes with an onerous contract, one will need to check for provisions, such as
provisions for imminent losses according to IAS 37 – “Provisions, Contingent Liabilities and
Contingent Assets”.
The entity must present distinctively the biological assets in its balance sheet, and must
indicate the global result of its biological assets during the current period. Furthermore, the
entity must present for each biological activity group, the following: description of the group,
active quantities at the closure and harvests obtained during the current period, as well as fair
value indicators.
Moreover, one must present the net fair value of an agricultural produce during the
current period, during harvest, the financial commitments and property restrictions, a
variation table of the biological assets and additional information, in case the fair value could
not be realistically estimated.
IAS41 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.
The fair value estimation for agricultural produce at the harvesting point is strictly
controlled compared to biological assets (according to IAS 41). Therefore, harvested cereal,