FRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with earlier application permitted. IFRS 15 establishes the principles that an entity applies when reporting information about the nature, amount, timing and uncertainty of revenue and cash flows from a contract with a customer. Applying IFRS 15, an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To recognise revenue under IFRS 15, an entity applies the following five steps: identify the contract(s) with a customer. identify the performance obligations in the contract. Performance obligations are promises in a contract to transfer to a customer goods or services that are distinct. determine the transaction price. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. If the consideration promised in a contract includes a variable amount, an entity must estimate the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods or services to a customer. allocate the transaction price to each performance obligation on the basis of the relative stand-alone selling prices of each distinct good or service promised in the contract. recognise revenue when a performance obligation is satisfied by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer services to a customer). For a performance obligation satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied. Standard history In April 2001 the International Accounting Standards Board (Board) adopted IAS 11 Construction Contracts and IAS 18 Revenue, both of which had originally been issued by the International Accounting Standards Committee (IASC) in December 1993. IAS 18 replaced a previous version: Revenue Recognition (issued in December 1982). IAS 11 replaced parts of IAS 11 Accounting for Construction Contracts (issued in March 1979). In December 2001 the Board issued SIC‑31 Revenue—Barter Transactions Involving Advertising Services. The Interpretation was originally developed by the Standards Interpretations Committee of the IASC to determine the circumstances in which a seller of advertising services can reliably measure revenue at the fair value of advertising services provided in a barter transaction. In June 2007 the Board issued IFRIC 13 Customer Loyalty Programmes. The Interpretation was developed by the IFRS Interpretations Committ

1. IAS 41
AGRICULTURE
Compiled by: Murtaza Quaid, ACA

2. IAS 41: Agriculture
In this Part:
 IAS 41 Definitions
 Scope of IAS 41 Agriculture
 Biological assets and their characteristics
 Bearer plants and its measurement
 Recognition of biological assets
 Measurement of biological assets (+ illustration)
 Presentation of biological assets
 Agricultural produce
 Government grant related to agricultural activity
IAS 41: Agriculture
Compiled by: Murtaza Quaid, ACA

3. IAS 41 DEFINITIONS
Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
Agricultural activity is the management by an entity of the biological transformation and
harvest of biological assets
 for sale; or
 for conversion into agricultural produce; or
 into additional biological assets.
Biological asset is a living animal or plant, such as sheep, cows, plants, trees
and so on.
Agricultural produce is the harvested product of the entity’s biological assets.
Agricultural
Produce
Biological
assets
Agriculture
Activity

4. IAS 41 SCOPE
Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
 Except bearer plants
Agricultural
Activity
Biological assets
Agricultural produce
Government grant
 At the point of harvest
 Related to agriculture
X Agricultural land (IAS 16 or IAS 20);
X Harvested agricultural product (IAS 2);
X Intangible assets related to agricultural activity (IAS 38);
X Bearer plants (IAS 16) and related government grant (IAS 20).
X X X IAS 41 does NOT apply to:

5. Biological
transformation
Asset changes
Asset creation
BIOLOGICAL ASSETS And Their Characteristics
Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
 Growth
 Degeneration
 Production (non-living)
 Procreation (living)
Biological assets
Consumables
Bearer
⇒ Themselves are
harvested
⇒ Bear produce
for harvest

6. BEARER PLANTS
Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
A bearer plant is 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.
Measurement
 Apply IAS 16 Property, plant and equipment
 Until maturity: COST
 After they mature: Depreciation + Impairment if any
 Agricultural produce: IAS 41, then IAS 2

7. Recognition
Control as a result of past
event
Future economic benefit
Fair value / cost reliably
measurable
RECOGNITION OF BIOLOGICAL ASSETS
Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
(Physical attributes)

8. Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
 Net market value => Principal market (IFRS 13)
 If fair value not available => On initial recognition: Cost
- Acc. Depreciation
- Acc. Impairment
Measurement
Fair value - Costs to sell
MEASUREMENT OF BIOLOGICAL ASSETS

9. Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
 Income / expense in P/L
 Present these 2 components separately
CHANGE
In the carrying amount
Difference in fair value Physical change in biological asset
Carrying amount at the
end of period
Carrying amount at the
start of period
MEASUREMENT OF BIOLOGICAL ASSETS

10. Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
Question 1.
A herd of 10 animals 2 year old was held at 1 January 20X1. One animal aged 2.5 years was purchased on 1 July
20X1 for 108, and one animal was born on 1 July 20X1. No animals were sold or disposed of during the period.
Per-unit fair values less estimated point-of-sale costs were as follows:
 2 year old animal at 1 January 20X1 Rs. 100
 Newborn animal at 1 July 20X1 Rs. 70
 2.5 year old animal at 1 July 20X1 Rs. 108
 Newborn animal at 31 December 20X1 Rs. 72
 0.5 year old animal at 31 December 20X1 Rs. 80
 2 year old animal at 31 December 20X1 Rs. 105
 2.5 year old animal at 31 December 20X1 Rs. 111
 3 year old animal at 31 December 20X1 Rs. 120
Required: -
Determine the change in fair value less point of sale expenses between the portion to physical changes and the
portion attributable to price changes between the two dates mentioned above?
MEASUREMENT OF BIOLOGICAL ASSETS

11. Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
Fair value less costs to sell of herd at 1 January 20X1
- 10 animals 2 year old (10 x 100) 1,000
Purchase on 1 July 20X1
- 1 animal 2.5 year old (1 x 108) 108
Increase in fair value less costs to sell due to price change:
- 10 animals 2 year old [10 x (105 - 100)] 50
- 1 animal 2.5 year old [1 x (111 - 108)] 3
- 1 newborn animal [1 x (72 - 70)] 2 55
Increase in fair value less costs to sell due to physical change:
- 10 animals from 2 to 3 years old [10 x (120 - 105)] 150
- 1 animal from 2.5 to 3 years old [1 x (120 - 111)] 9
- 1 animal born (1 x 70) 70
- 1 animal from 0 to 0.5 year old [1 x (80 - 72)] 8 237
Fair value less costs to sell of herd at 31 December 20X1
- 11 animals 3 year old (11 x 120) 1,320
- 1 animal 0.5 year old (1 x 80) 80 1,400
Solution 1.
MEASUREMENT OF BIOLOGICAL ASSETS

12. Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
PRESENTATION OF BIOLOGICAL ASSETS
 In the SOFP => Separate class of assets
 In the SOFP / Notes => Sub-classification : - Class of animal / plant
- Nature of activities
- Maturity / immaturity
=> Reconciliation of carrying amount
Presentation

13. AGRICULTURAL PRODUCE
Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
⇒ Included within inventories in the SOFP
⇒ Disclosed separately (SOFP or notes)
Recognition
Measurement
Presentation
⇒ Fair value – Costs to sell
⇒ Change in fair value = Income / expense in P/L
⇒ Recognized at the point of HARVEST
⇒ Derecognized when: - Enters the trading
- Enters production process
⇒ The harvested product of the entity’s biological assets
IAS 2

14. GOVERNMENT GRANT
Compiled by: Murtaza Quaid, ACA IAS 41: Agriculture
 IF biological asset is measured at cost less acc. depreciation & impairment
 IF biological asset is measured at fair value less cost to sell:
Conditional Unconditional
IAS 20 Accounting for Government Grants and
Disclosure of Government Assistance
 Including “set-aside” grants
 As income when conditions are met
 As income when the grant
becomes receivable