An approach to obtaining the initial values is to use

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value. An approach to obtaining the initial values is to use the price tables for bare land sites of different fertility classes provided by the Forestry Development Centre Tapio (Tapio 2007). IAS 16 requires land to be measured either at its cost less any accumulated impairment losses, or at a revalued amount. The two accounting models are the cost model (IAS 16.30) and the revaluation model (IAS 16.31). According to Cairns (2006, p. 17) the cost model is the usual measurement basis allowed by IFRS and adopted in practice, and fair value is an option. However, fair value measures for property, plant, and equipment are superior to historical cost based on the characteristics of predictive value, feedback value, timeliness, neutrality, representational faithfulness, compatibility, and consistency, while verifiability appears to be the sole qualitative characteristic favouring historical cost (Herrmann et al. 2006). The revaluation increase of bare
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Working Papers of the Finnish Forest Research Institute 93 22 land adds “revaluation surplus” directly to the balance sheet and the decrease reduces the surplus (IAS16.39). Where the revaluation surplus has been used, the increases and decreases affect profit and loss (IAS 16.40). Revaluations are made with sufficient regularity (IAS 16.31), and annually in every closing of the books here. Stora Enso report difficulty in the annual revaluation (Bolse et al. 2005). Recall that the comparisons between market values and NPV estimations suggest a four per cent (4%) interest rate (Hyytiäinen al. 2007). The bare values have been estimated stand-wise using the Faustmann formulae and a long-term forecasting horizon. The capital impairment question When the fair value is less than the cost for impaired, long-lived, non-monetary assets, disclosure is required. The measurement alternatives include fair value, replacement cost, undiscounted future cash flows and discounted future cash flows using a choice of several possible interest rates (Schuetze 1987). Entities reporting under IFRSs are required to determine a value in use in accordance with IAS 36: Impairment of assets. IAS 36 allows three alternative starting-points in determining a suitable discount rate: (i) weighted average cost of capital (WACC), (ii) incremental borrowing rate or (ii) another market borrowing rate. However, WACC is the only suitable starting- point (Husmann and Schmidt 2008). Government grants An unconditional government grant related to a biological asset measured at its fair value less estimated point-of-sale costs is recognised as income when it becomes receivable (IAS 41.34). The grants and subsidies are reported immediately after total output, such as turnover as the separate item Subsidies on production and costs (Argilés and Slof 2001). Conditional grants do not exist, because subsidies will not be paid before conditions are met. However, the forest- owner may receive plants as a grant in a subsided regeneration project, but financial support for his work afterwards. Government grants by member states of the EU have already been allowed
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