Bearer plants

Learning objectives

• Distinguish a bearer plant (IAS 16) from its agricultural produce (IAS 41).L3
• Determine the treatment of the costs of a bearer plant before it reaches maturity.L4

Normative references

• IAS 16 §3Exclusions: assets held for sale (IFRS 5), biological assets related to agricultural activity other than bearer plants (IAS 41), the recognition and measurement of exploration and evaluation assets (IFRS 6), mineral rights and mineral reserves; IAS 16 nevertheless applies to property, plant and equipment used to develop or maintain the assets described in (b) to (d).
• IAS 16 §6Definitions. Property, plant and equipment: tangible items held for use in the production or supply of goods or services, for rental to others or for administrative purposes, and expected to be used during more than one period. Bearer plant: a living plant used to produce agricultural produce, expected to bear produce for more than one period and very unlikely to be sold as agricultural produce, except for incidental scrap sales. Carrying amount: the amount at which the asset is recognised after deducting accumulated depreciation and accumulated impairment losses. Cost: the cash or cash equivalents paid, or the fair value of the other consideration given, to acquire or construct the asset, or the amount attributed to it under another IFRS (for example IFRS 2). Depreciable amount: the cost of the asset (or other amount substituted for cost) less its residual value. Depreciation: the systematic allocation of the depreciable amount over the useful life. Entity-specific value: the present value of the cash flows the entity expects from the continuing use of the asset and its disposal at the end of its useful life, or expects to incur to settle a liability. Fair value: by reference to IFRS 13. Impairment loss: the excess of carrying amount over recoverable amount. Recoverable amount: the higher of fair value less costs of disposal and value in use. Residual value: the amount, net of estimated costs of disposal, that the entity would obtain today from disposing of the asset if it were already of the age and in the condition expected at the end of its useful life. Useful life: the period over which the entity expects to use the asset, or the number of production units it expects to obtain from it.
• IAS 16 §22ABearer plants are accounted for in the same way as self-constructed items until they are in the location and condition necessary to be capable of operating in the manner intended.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

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