BC73 The Board considered whether produce should be recognised at fair value less costs to sell only at the point of harvest or from the date that it starts to grow.

BC74 The Board observed that the produce is a consumable biological asset growing on the bearer plant and the growth of the produce directly increases the expected revenue from the sale of the produce. Consequently, fair value measurement of the growing produce provides useful information to users of financial statements about future cash flows that an entity will actually realise. In contrast the bearer plants themselves are not sold and the changes in the fair value of the bearer plants do not directly influence the entity’s future cash flows. The Board also observed that produce will ultimately be detached from the bearer plants and is normally sold separately, meaning it has a market value on its own. This is in contrast to many bearer plants that are unlikely to have an observable market value on their own because they can only be sold while attached to the land.

BC75 Many respondents to the ED acknowledged the conceptual reasons for accounting for produce at fair value less costs to sell, but expressed concern with the likely practical challenges. Some respondents suggested only requiring fair value less costs to sell to be measured at the point of harvest, or providing additional relief from fair value measurement on the basis of cost-benefit considerations. Other respondents suggested accounting for produce using a cost model before harvest, similarly to inventories or work in progress. Several respondents said further guidance should be provided on how to measure the produce at fair value.