BC116 Preparers of financial statements have expressed concern that, in the absence of active markets for bearer plants, fair value measurements are complex, time-consuming and costly, especially for entities that hold large plantations with varying maturities, yield profiles and locations. The amendments respond to this concern and are expected to significantly reduce costs for preparers of financial statements by permitting a cost model for bearer plants. However, entities will still be required to perform the following fair value measurements:

(a) the produce growing on the bearer plants will still be measured at fair value less costs to sell. The Board’s reasoning for requiring the produce to be measured at fair value less costs to sell is set out in paragraphs BC73–BC79.

(b) as is the case for all items of property, plant and equipment, bearer plants will be subject to an impairment test under IAS 36. Consequently, if there is an indication that bearer plants are impaired at the reporting date, the entity would be required to estimate the recoverable amount of the asset (or its cash-generating unit). The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs of disposal and its value in use.

BC117 Nevertheless, the amendments will reduce compliance costs for the majority of entities because: