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Ø fair value the price that would be received to sell

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ØFair value– the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants at the measurementdate.ØCosts to sell– the incremental costs directly attributable to the disposal of anasset, excluding finance costs and income taxes.The fair value measurement of a biological asset or agricultural produce may be facilitatedby grouping biological assets or agricultural produce according to significant attributes; forexample, by age or quality. An entity selects the attributes corresponding to the attributesused in the market as a basis for pricing. Entities often enter into contracts to sell theirbiological assets or agricultural produce at a future date.Contract pricesare not necessarily relevant in measuring fair value, because fair valuereflects the current market conditions in which market participant buyers and sellers wouldenter into a transaction. As a result, the fair value of a biological asset or agriculturalproduce isnot adjustedbecause of the existence of a contract. In some cases, a contractfor the sale of a biological asset or agricultural produce may be an onerous contract, as
defined in PAS 37 Provisions, Contingent Liabilities and Contingent Assets. PAS 37applies to onerous contracts.Cost may sometimes approximate fair value, particularly when:a. little biological transformation has taken place since initial cost incurrence (forexample, for seedlings planted immediately prior to the end of a reporting periodor newly acquired livestock); orb.the impact of the biological transformation on price is not expected to be material(for example, for the initial growth in a 30-year pine plantation production cycle).Biological assets are often physically attached to land (for example, trees in a plantationforest). There may be no separate market for biological assets that are attached to theland but an active market may exist for the combined assets, that is, the biological assets,raw land, and land improvements, as a package. An entity may use information regardingthe combined assets to measure the fair value of the biological assets. For example, thefair value of raw land and land improvements may be deducted from the fair value of thecombined assets to arrive at the fair value of biological assets.A biological asset that is previously measured at fair value less cost to sell is continued tobe measured at fair value less costs to sell until it is disposed of.Government GrantsOnly government grants that are related to biological assets measured atfair value lesscost to sell are accounted for under PAS 41.Those that are related to biological assetsmeasured at cost less accumulated depreciation and accumulated impairment losses areaccounted for under PAS 20.

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Term
Fall
Professor
NoProfessor
Tags
Depreciation, Generally Accepted Accounting Principles, Plant and Equipment, associate

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