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Dear Sir,
I have a doubt with this line in the BPP text“Following the treatment of biological assets above, the IAS states that agricultural produce should be measured at each year end at fair value less estimated point-of-sale costs, to the extent that it is sourced from an entity’s biological assets, which are also valued at fair value.”
What does this mean?
Also, I have another doubt,
In the BPP text there is a line that says,“If a government grant requires an entity not to engage in specified agricultural activity (eg the EU’s set aside grant), an entity should only recognise the grant as income when, and only when, the conditions are
met.”Does that mean this will be accounted under IAS 20 ( as it is required not to engage in agricultural activities) or IAS 41 only?
Thanks!
Wine, from the entity’s grape vines, should be reassessed at each year end at fair value less estimated costs of selling
And the grape vines themselves are also valued at fair value
For the government grant, the double entry on receipt will be:
Dr Cash
Cr Deferred incomeand it will stay in deferred income until that time (probably within 12 months from receipt of the grant) that the entity ceases to use the land for agricultural purposes
When I bought my previous home, a small farm, I had to undertake not to carry on any form of agricultural activity and thus was prevented from getting into a situation where I would have been able to claim a set-aside grant
Does that answer you?
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