ORGANIZATION OF ACCOUNTING OF BIOLOGICAL ASSETS IN

ACCORDANCE WITH IAS 41 "AGRICULTURE"

 

Kazakh national University named after al-Farabi

Higher school of Economics and business

Zhora Aigerim

aikoniya_94@mail.ru

Kazakhstan, Almaty

 

Currently in our country and in the world questions agricultural and food policy has never relevant. Of great importance is the provision of food security through sustainable development agricultural production. With the introduction of new accounting standards required more a detailed approach to the organization of the accounting system on the company, as accounting data are the basis for the adoption management decisions and determine economic forecasts [1].

The establishment of accounting, financial reporting and disclosure of agricultural activity revealed in IFRS (IAS) 41 "Agriculture".

IAS 41 is applied to account for associated with agricultural activity objects:

·                                                                                                                                                                                                                                                                                                             biological assets;

·                                                                                                                                                                                                                                                                                                             agricultural products at the point of collection;

·                                                                                                                                                                                                                                                                                                             some government subsidies.

IAS 41 does not apply to:

·                                                                                                                                                                                                                                                                                                             of agricultural land;

·                                                                                                                                                                                                                                                                                                             intangible assets related to agricultural

·                                                                                                                                                                                                                                                                                                             activities.

Agricultural activity is the management of the biological transformation of biological assets for sale, receive agricultural products or produce additional the biological assets. In the course of agricultural activities animals and plants through the process of biotransformation in a controlled environment. Management – this is a key point that differentiates the activity of agricultural from others of its species. Biotransformation processes of growth, degeneration, production and reproduction that cause qualitative or quantitative changes in a biological asset.

IAS 41 "Agriculture" agricultural activities as managing biotransformation of biological assets in order to implement, obtain agricultural products or produce additional biological assets.

Biotransformation results:

·                                                                                                                                                                                                                                                                                                             to change the asset in the form of an increase or decrease in its

·                                                                                                                                                                                                                                                                                                             quantity or quality. As a result, play may appear

·                                                                                                                                                                                                                                                                                                             additional assets.

·                                                                                                                                                                                                                                                                                                             the receipt of agricultural products (cereals, legumes,

·                                                                                                                                                                                                                                                                                                             meat, milk).

Different types of agricultural activities have common features:

·                                                                                                                                                                                                                                                                                                        ability will change;

·                                                                                                                                                                                                                                                                                                        change management;

·                                                                                                                                                                                                                                                                                                        rating changes.

Change management contributes to biotransformation by creating favorable and stable conditions necessary for the implementation of this process. Examples of such control are temperature control and lighting, fertilization in the soil to ensure productivity. It is the management of biological transformation distinguishes agricultural activity from other activities related to biological assets. Therefore, the collection of the harvest from a biological asset that is not carried out, not is an agricultural activity. Part biological transformation is to assess changes in a biological asset. Assessment of changes includes the measurement and monitoring changes in quality (e.g. content of fat or protein fiber strength) or quantity (for example, progeny, weight, length, etc.).

IAS 41 is applied to account for a biological asset (biological asset is considered to be animal or plant) and agricultural products i.e. products obtained from biological assets at the point of collection. Then after collecting the product applies IAS 2 "Inventories" or other appropriate international financial reporting standard. According to IAS 41 agricultural products is products collected biological assets of the company. Agricultural products during its separation from biological of an asset (the crop is a grain, fruit, berries, acquired during harvesting; in livestock, wool, milk, eggs, honey produced in the time of shearing, milking, harvesting) or at the termination of processes the life of biological assets (timber obtained by cutting down trees) ceases to be an element of biological assets and recognised as a separate asset. Biological asset on initial recognition and at each reporting date are measured at their fair the cost less estimated sales expenses, except in cases when the fair value cannot be determined with a sufficient degree reliability. Agricultural products collected from biological assets should be valued at fair the cost established at the time of harvest, net of anticipated supply costs.

For the purposes of accounting of biological assets classified according to such groups: non-current assets and current biological assets. Biological assets should be accounted for as non-current assets if they are used in more than one year (for example, trees or animals). Biological assets with a lifecycle of less than one year (for example, the cultivation of wheat, sunflower) should be considered as current biological assets.

Advisable for similar biological assets to join in group (for example, age, purpose). In this case the fair the cost of a defined group of assets. The object of accounting of biological assets crop production can be a species of agricultural plants (cereals, fodder, oilseeds, fruits and berries, grapes) or homogeneous groups of biological assets, which consist of the subspecies agricultural plants (winter crops or spring crops, legumes, and etc.) or specific crops (barley, wheat, corn, etc.).

The object of accounting in livestock can be types animals (e.g., cattle, pigs, poultry, etc.) or homogeneous groups of biological assets, which consist of certain age or production groups. Biological assets can be divided into: Mature and immature. Mature biological assets are assets that have either reached of parameters that allow you to start collecting products (power biological assets) or are able to collect products in a regular basis (harvestable biological assets).

In the analytical accounting of biological assets are shown in monetary and quantitative terms. The unit of measurement biological assets is a thing, head, etc. Certain types of biological assets livestock can to further characterize live weight (e.g., pigs, cattle, etc.).

Biological assets in plant cultivation on analytical accounting can be displayed in units of area which they actually is, if the unit of measurement cannot be determined or it is not economically feasible (for example, corn, sunflower, legumes).

Distribution costs include commissions to brokers and dealers fees of regulatory authorities and commodity exchanges, transfer taxes property, and duties. To sales expenses not related transportation and other costs for the delivery of assets to the market. The fair value of biological assets and agricultural production is based on prices in an active market. Therefore, the price of the active market will be close to the real market the price of agricultural products, biological asset, net the current level of retail spending (excluding transportation expenses).

In the absence of an active market the company to determine fair value uses one or more of the following indicators:

·                                                                                                                                                                                                                                                                                                             the price of the last transaction on the market, provided that during the period between

·                                                                                                                                                                                                                                                                                                             the date of the transaction and reporting date there were no significant

·                                                                                                                                                                                                                                                                                                             changes in economic conditions;

·                                                                                                                                                                                                                                                                                                             market prices for similar assets, adjusted to

·                                                                                                                                                                                                                                                                                                             given the differences;

·                                                                                                                                                                                                                                                                                                             industry benchmarks such as the price of cattle

·                                                                                                                                                                                                                                                                                                             per kilogram of meat.

In the absence of market prices as a basis for determining the fair value of a biological asset in its current location and condition, you can use the cost future cash flows, to the exclusion of any increase in value in the result of the biotransformation and future activities. When this applies the discount factor, calculated from the current market conditions for cash flows before tax.

Gains or losses arising on the initial recognition a biological asset at fair value less anticipated distribution costs, as well as from changes in the fair value of biological asset less estimated sales expenses should be taken into account in determining net profit or loss for the period in which they occur. Profit may arise on initial recognition a biological asset, for example the birth of a calf. Gains or losses arising on the initial recognition agricultural produce at fair value less anticipated supply costs should be considered when the determination of net profit or loss for the period in which they are place. Due to accounting at fair value of biological assets on the balance sheet should present a reconciliation of the carrying amount biological assets at the beginning and end of the period, based on changes occur during the current period. Comparative information uncover not necessarily.

During reconciliation, you should consider:

·                                                                                                                                                                                                                                                                                                             profit or loss from changes in fair value

·                                                                                                                                                                                                                                                                                                             less estimated sales costs;

·                                                                                                                                                                                                                                                                                                             gains in connection with asset purchases;

·                                                                                                                                                                                                                                                                                                             reduction of value in connection with the sale of assets;

·                                                                                                                                                                                                                                                                                                             reduction of value in connection with the collection of products;

·                                                                                                                                                                                                                                                                                                             increase in value resulting from business combinations;

·                                                                                                                                                                                                                                                                                                             net exchange rate differences arising from recalculation

·                                                                                                                                                                                                                                                                                                             financial statements of foreign companies;

·                                                                                                                                                                                                                                                                                                             other changes.

Thus, the development of accounting leads to the standard rules recognized in international practice, application agricultural enterprises fair value, since the main goal of financial statements is the representation users information about the financial position, results economic activities and changes in financial condition company, useful for a wide range of users from the point of view decision-making.

 

Literature:

1. The law of RK "On accounting and financial reporting" ¹234-III, dated 28.02.2007 g.

2. International Financial Reporting Standards.

3. Kuvatov R. Y., J. S. nusipov the Development of agro-industrial production in a market economy: problems and priorities (on the materials of the Republic of Kazakhstan). – Almaty,2005.;

4. Dobrynin, V. A. agricultural Economics. - Moscow, VO "Agropromizdat", 2007-476ñ.