Fair values of plantations

Question

We have some coconut plantation which is currently around 02 years old and not yet making any produce. The initial land preparation, planting & maintenance cost is carried at cost under local GAAP. I heard that these need to be carried out at fair value under IFRS. Can anyone tell me how to fair value this type of plantation ?

Answer 1

This is a bearer biological asset and you can use IAS 16 instead of IAS 41 therefore not compulsory to fair value.

Answer 2

This is covered by IAS 41- Agriculture. IAS 41is applied to account for
►Biological assets - ie. a living plant or animal
► Agricultural produce at the point of harvest (ie the harvested product of the entity’s biological asset)

Initial recognition
Coconut trees shall be measured on initial recognition and at the end of each reporting period at its fair value less costs to sell (FVLCS). If fair value can not be determined reliably, you should measure the trees at historical cost less any accumulated depreciation and any accumulated impairment losses.

Agricultural produce (coconuts)
Coconuts harvested should be measured at its fair value less costs to sell at the point of harvest.

Comments

Coconut plantation is a bearer biological asset & therefore you need not use IAS 41 instead IASB has allowed to use IAS 16 - PPE