ECONOMICS

Detailed explanation-1: -(a) A gain or loss arising on initial recognition of a biological asset at fair value less costs to sell and from a change in fair value less costs to sell of a biological asset shall be included in profit or loss for the period in which it arises.

Detailed explanation-2: -The International Accounting Standard 41 (IAS 41) states that a biological asset is any living plant or animal owned by the business, and they are typically measured at fair value minus selling costs. For example, livestock such as goats, cows, sheep, pigs, and fish are all considered biological assets.

Detailed explanation-3: -IAS 41 establishes the accounting treatment for biological assets during their growth, degeneration, production and procreation, and for the initial measurement of agricultural produce at the point of harvest.

Detailed explanation-4: -IAS 41 Agriculture sets out the accounting for agricultural activity – the transformation of biological assets (living plants and animals) into agricultural produce (harvested product of the entity’s biological assets).

Detailed explanation-5: -Recognition of biological assets For a biological asset to be recognized, the entity should control the asset as a result of past events, it should be probable that future economic benefits associated with the asset will flow to the entity and the fair value or cost of the asset can be measured reliably.