Ias 41 for the evaluation of biological property came

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value of property, plant and equipment has increased more than 10% (Aisbitt 2006). IAS 41 for the evaluation of biological property came into force on January 1, 2003 (IAS 2002). 4 Seeing the effects of biological transformation such as growth is necessary to enable the financial statement users to assess the enterprise’s performance and position (Yanou 2001). Moreover, an international accounting standard such as IAS/IFRS and US GAAP provides a better information basis and enhances credibility, which increases loan availability (Liebfried 2002). The IAS 41 requires that publicly quoted enterprises evaluate their biological property on initial recognition and at each balance sheet date at its ‘fair value’ less the estimated point-of-sale costs (IAS 41.12). Fair values can be interpreted as market prices, from which the cost of the sales momentum will be deducted (Argilés and Slof 2001). If the market-determined values and prices are not available, an enterprise uses the present value of expected net cash flows from the asset discounted at a current market-determined pre-tax rate in determining fair value (IAS 41.20). Even in forest economics, net present value is the decision criteria as already suggested by Samuelson (1976). In forestry, a stand ready for final felling can be evaluated by the felling value minus sales costs. The market prices of plantings, young, or middle-aged stands do not, however, conform to the present state of the biological property. The present value of the expected net cash flow from the asset can then be used as their fair value (IFRIC 2003). Finally, cost may sometimes approximate fair value, particularly when the impact of the biological transformation on price is not expected to be material (for example, for initial growth in a 30-year pine plantation production cycle) (IAS 41.24). 1.4 Previous work related to forestry accounting in the IAS/IFRS framework Argilés and Slof (2001) and Elad (2004) lay a solid theoretical background analysis and comparisons for the implementation of the Farm Accountancy Data Network (FADN) and IAS 41. Argilés and Slof (2001) believe that IAS 41 resolves difficulties in asset valuation, as it defines clear and simple valuations for agricultural assets. They argue, moreover, that ‘procedures for changes in the carrying amount for these assets are also easy to implement’. Their key contribution is to analyse the compatibility of FADN and IAS 41, and to serve implementation of IAS 41 using FADN. In all, ‘FADN procedures could be used to prepare financial statements compatible with IAS 41’. On the other hand, ‘IAS 41 does not seem to take into account the practical experience of FADN or the potential needs of policy makers’. 4 Agriculture-related definitions of IAS 41 specify the following meanings: a biological asset is a living animal or plant. Biological transformation comprises the process of growth, degeneration, production, and procreation that cause quali - tative or quantitative changes in biological assets. Agricultural produce is the harvested product of the enterprise’s bio - logical assets. Harvest
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  • Spring '17
  • Jane Smith
  • Balance Sheet, The Land, ........., International Financial Reporting Standards, Finnish Forest Research Institute

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