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So i have a question about measurement basis regarding IAS 41:
It states that biological assets should be measured at Fair value less costs to sell.
My question is that why we have to deduct “costs to sell” from fair value since the biological assets are not held for sale but they are non current assets.
Secondly why costs to sell are not deducted from fair value under IAS 40 – Investment property (fair value model) and IAS 16 – PPE (revaluation model)?
IAS 41 is different to both IAS 40 and IAS 16 in that we will be selling the biological assets at some point in the future unlike with IP and PPE, hence why we do not deduct the selling costs in those two standards.
When measuring the fair value we need to look at the amount received and in order to sell the asset in future then we will have to pay the selling costs, so the fair value takes account of the net amounts received.
Thanks
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