Agricultural produce
IAS 41 generally requires produce harvested from biological assets to be measured at fair value less costs to sell at the point of harvest. That amount becomes cost for subsequent application of IAS 2 or another applicable standard. Harvested produce differs from the living biological asset: wool is produce, while the sheep is the biological asset. Processing after harvest, such as turning grapes into wine, is outside the biological transformation of the original plant.
Worked example
At harvest a farm’s crop has fair value of $12,000 and selling costs of $500. Its initial harvest measurement is $11,500; that amount is subsequently used as inventory cost under IAS 2, assuming no other relevant circumstances.
Common mistake
Carrying harvested produce indefinitely at the living plant’s carrying amount or confusing post-harvest processing with agricultural growth.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |
