AGRICULTURE

ACCOUNTING

Agriculture Accounting
Agricultureemploys

47% of the
Filipino workforce as of 2013,
according to World Bank
statistics.

Agriculture

accounts for 12% of

Filipino GDP as of 2013,
according to the World Bank.

Agriculture Accounting
Farming

is an enterprise/business;

Farm

records and accounting forms are key

tools where the farmer may base his future
decisions;

good farm record is also a tool used in

assessing and mitigating farm business risks
and opportunities;

little of farming + a little of business =

Agriculture accounting.

Agriculture Accounting
Farm

records provide information

on how efficiently the resources
are used and how to determine
income or loss;
Farm records are also essential
for planning and decision making;
Farm records is used in obtaining
credit;
Farm records is used for income
tax purposes

Agriculture Accounting
the

essential first step in

organizing business transactions;

simply

a record of the money you

spend and the money you earn;

Agriculture Enterprise
Classification of Enterprise in Agriculture:
Production Enterprises - these are crop and
livestock enterprises that produce marketable
commodities.
Service Enterprises - include machinery and
equipment services, an on-farm retail market, and
the farm shop. These enterprises are internal to the
farm business and provide services not directly
marketed.

Holding Enterprises - these are storage facilities,

buildings, capitalenterprises that hold the inputs or
farm-produced commodities until they are ready for
use in a particular enterprise or are ready for sale.

PAS 41/IAS 41
AGRICULTURE
The objective of PAS 41/IAS 41is to
establish standards of

accounting for agricultural

activity the management of the
biological transformation of
biological assets (living plants and
animals) into agricultural produce
(harvested product of the
enterprise's biological assets).

PAS 41/IAS 41
The

standard applies to biological assets with the exception

of bearer plants, agricultural produce at the point of
harvest, and government grants related to these biological
assets.

It

does not apply to land related to agricultural activity,

intangible assets related to agricultural activity,
government grants related to bearer plants, andbearer
plants. However, it does apply to produce growing on
bearer plants.

Note:

Bearer plants were excluded from the scope of IAS 41

byAgriculture: Bearer Plants (Amendments to IAS 16 and
IAS 41), which applies to annual periods beginning on or
after 1 January 2016.

Key Definitions (PAS/IAS

41.5)
Biological asset

A living animal or plant

Bearer plant*

A living plant that:

a.

is used in the production or supply of

agricultural produce

b.

is expected to bear produce for more

than one period, and

c.

has a remote likelihood of being sold as

agricultural produce, except for
incidental scrap sales.

Agricultural produce

The harvested product from biological assets

Costs to sell

The incremental costs directly attributable to

the disposal of an asset, excluding finance
costs and income taxes

PAS 41/IAS 41
Agricultural

produce is the harvested

product of the entitys biological assets.

biologicalassetis a living animal or plant.

Initial

Recognition

An

enterprise should recognize a biological asset or agriculture produce

only when the enterprise controls the asset.
The fair value or cost of the asset should be measured reliably.

Measurement
Biological

assets should be measured on initial recognition and at

subsequent reporting dates at fair value less estimated point-of-sale
costs
Unless fair value cannot be reliably measured. Agriculturalproduce
should be measured at fair value lessestimated point-of-sale costs
at the point of harvest.

PAS 16/IAS 16 (Property, Plant and

Equipment
There

is a subset of biological assets, known as bearer

plants, which are used solely to grow produce over several
periods.The amendment defines a bearer plant as a living
plant that:
is used in the production or supply of agricultural produce;
is expected to bear produce for more than one period; and
has a remote likelihood of being sold as agricultural
produce, except for incidental scrap sales.
All of the abovecriterianeed to be met for a biological
asset to be considered a bearer plant.
At the end of their productive lives they are usually
scrapped. Once a bearer plant is mature, apart from bearing
produce, its biological transformation is no longer significant
in generating future economic benefits. The only significant
future economic benefits it generates come from the
agricultural produce that it creates.

PAS 16/IAS 16 (Property, Plant and

Equipment
Since

bearer plants will now be within the scope of PAS

16and will besubjectto all of therequirementstherein.
This includes the ability to choose between the cost model
and revaluation model for subsequentmeasurement.
Bearer animals, like bearer plants, may be held solely for
the produce that they bear. However, bearer animals have
been explicitly excluded from the amendments and will
continue to be accounted for under PAS 41 on the basis that
themeasurementmodel would become more complex if
applied to such assets.
Government grants relating to bearer plants will now be
accounted for in accordance with PAS 20 Accounting for
Government Grants and Disclosure of Government
Assistance, instead of in accordance with PAS 41.
The produce growing on bearer plants will remain within the
scope of PAS 41.