What is Agricultural Accounting?
Agricultural accounting is the application of IFRS rules, mainly IAS 41 and IAS 16, to biological assets (living plants and animals) and agricultural produce. Biological assets are measured at fair value less costs to sell, with changes recognized in profit or loss.
How It Works
- Distinguish bearer plants (treated as PPE) from other biological assets (IAS 41).
- Measure biological assets at fair value less costs to sell at each reporting date.
- Recognize gains and losses from changes in fair value in profit or loss.
- Treat harvested agricultural produce as inventory at the point of harvest.
Saudi Context
Saudi dairy companies like Almarai and palm date producers apply IAS 41 to their living herds and groves, recognizing fair value changes through profit or loss.
Example
A herd of dairy cows valued at SAR 5 million at year-end versus SAR 4.5 million at year-start produces a SAR 500,000 fair value gain through profit or loss.