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IASB issues proposals on bearer plants

The International Accounting Standards Board (IASB) have published for public comment an exposure draft of proposals to include bearer plants within the scope of IAS 16 Property, Plant and Equipment.

Bearer plants are a class of biological assets that, once mature will grow produce over their entire productive life. Common examples include grape vines, oil palms and rubber trees.

IAS 41 Agriculture states that all biological assets that are related to agricultural activity are measured at fair value costs to sell.

This is based on the principle that biological transformation is best reflected by fair value measurement. However, once mature, bearer plants no longer undergo significant biological transformation.

As a result the exposure draft proposes that bearer plants are accounted for by IAS 16 instead of IAS 41, therefore permitting the use of either a cost model or a revaluation model. The produce on the bearer plant would remain under the fair value model in IAS 41.
Commenting on the publication of the exposure draft, Hans Hoogervorst, chairman of the IASB said: "This is an important amendment for those jurisdictions with large agriculture industries and responds to feedback received from the IASB's agenda consultation as well as its Emerging Economies consultative group."

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