Agricultural produce harvested from biological assets

Learning objectives

• Explain that the cost of harvested agricultural produce classified as inventories is its fair value less costs to sell at the point of harvest, determined in accordance with IAS 41.L2

Normative references

• IAS 2 §20In accordance with IAS 41, inventories comprising agricultural produce that an entity has harvested from its biological assets are measured on initial recognition at their fair value less costs to sell at the point of harvest; this is their cost for the purposes of applying IAS 2.

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

3 questions

• Vergers du Lac harvests apples from its own orchards and classifies them as inventories pending their sale. On initial recognition, the apples are measured at their fair value less costs to sell at the point of harvest, and that amount is their cost for the purposes of IAS 2.L2
• Agricole des Trois Chênes harvests wheat from its own crops on 20 July 20X1 and stores it in a silo pending its sale. At the point of harvest, the fair value of the wheat less costs to sell amounts to 80,000. At 31 December 20X1, that same amount would be 95,000 because market prices have risen. The entity applies the measurement requirements of IAS 2 to this inventory (case data). Which amount is the cost of the wheat under IAS 2?L2
• Oliveraies de Montbrun harvests olives from its own trees and classifies them as inventories. At the point of harvest, the fair value of the harvested olives, determined under IAS 41, is 52,000 and costs to sell are estimated at 3,000. Cultivation costs incurred during the season amount to 31,000. At what amount do the olives enter inventories?L2