BC70 The Board considered whether a fair value approach or a cost accumulation approach should be applied to bearer plants before they reach maturity.

BC71 The Board noted that, before they mature, bearer plants undergo biological transformation and this distinguishes them from self-constructed property, plant and equipment. Such biological transformation would not be reflected by a cost accumulation approach. The Board further noted that a fair value approach would be consistent with the principle in IAS 41 that biological transformation is best reflected by fair value measurement.

BC72 However, the Board noted that IAS 16 does not incorporate internal profit in the measurement of a self-constructed item of machinery. By analogy, biological transformation should not be included either. The Board further noted that most of the investors and analysts consulted during the outreach performed by the staff said that the IAS 41 fair value information about bearer plants is of limited use to them and that the measurement of the fair values of bearer plants is particularly subjective during the early years of the life cycle of those bearer plants. For these reasons the Board decided that bearer plants should be measured at accumulated cost before they reach maturity. The Board also observed that it would be simpler to keep bearer plants in IAS 16 throughout their life. Virtually all respondents to the ED supported measuring bearer plants using a cost accumulation approach before they mature.