ExpertMedium2 marksMultiple Choice
ACCA · Question 21 · Agriculture
SECTION B - CASE 2: BioHarvest Agri
BioHarvest Agri Co operates commercial vineyards. The year-end is 30 September 20X6.
BioHarvest owns extensive vineyards. The grape vines themselves have an expected productive life of 30 years.
Under IFRS, how should the grape vines (the plants themselves, excluding the grapes growing on them) be accounted for?
SECTION B - CASE 2: BioHarvest Agri
BioHarvest Agri Co operates commercial vineyards. The year-end is 30 September 20X6.
BioHarvest owns extensive vineyards. The grape vines themselves have an expected productive life of 30 years.
Under IFRS, how should the grape vines (the plants themselves, excluding the grapes growing on them) be accounted for?
Answer options:
A.
As Biological Assets under IAS 41, measured at fair value less costs to sell.
B.
As Property, Plant and Equipment under IAS 16.
C.
As Inventory under IAS 2.
D.
As Intangible Assets under IAS 38.
How to approach this question
Identify whether the grape vines meet the definition of a 'bearer plant'. If so, recall the specific standard that applies to bearer plants.
Full Answer
B.As Property, Plant and Equipment under IAS 16.✓ Correct
A bearer plant is a living plant that is used in the production or supply of agricultural produce, is expected to bear produce for more than one period, and has a remote likelihood of being sold as agricultural produce. Grape vines meet this definition. Bearer plants are accounted for under IAS 16 Property, Plant and Equipment (using either the cost or revaluation model), not IAS 41.
Common mistakes
Assuming all living plants are biological assets under IAS 41.
Practice the full ACCA FR — Financial Reporting Practice Exam 1
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