BC106 The amendments will only affect specific types of agricultural activity, namely those entities with bearer plants.
BC107 Assuming that current IFRS adopters choose to apply the cost model in IAS 16 to bearer plants the main changes will be as follows:
|
Effect |
Fair value model in IAS 41 |
Cost model in IAS 16 |
Effect |
|---|---|---|---|
|
Financial position |
Measured at fair value less costs to sell (together with the produce). |
Measured at cost less any accumulated depreciation and any accumulated impairment losses. (Produce measured separately at fair value less costs to sell.) |
Net asset amounts are likely to be lower for the cost model than the fair value model during the earlier part of the productive life of a bearer plant. This is because the future cash flows that can be generated by the bearer plant, and reflected in a fair value measurement, will likely be higher than the cost on initial recognition. Over time, the carrying amounts measured in accordance with the two models are e |