Biological assets, such as living plants or animals, are typically classified as current assets on the balance sheet if they are expected to be sold or consumed within one year. If they are held for production or long-term use, they may be classified as non-current assets. Here's where biological assets might appear on a balance sheet:
- Current Assets:
- Inventory: Biological assets that are expected to be sold within the next year, such as crops ready for harvest or animals raised for sale, are included in the inventory section of the balance sheet.
- Holding Inventory: If the company has biological assets that are held for the production of goods or services but not yet ready for sale, these may be classified as holding inventory.
- Non-Current Assets:
- Property, Plant, and Equipment: Biological assets used in agricultural operations, such as orchards, plantations, or grazing land, are typically classified as property, plant, and equipment. These assets are depreciated over their useful lives.
- Agricultural Produce: Biological assets that are grown or raised for sale and are expected to be harvested more than one year from the reporting date are accounted for under IAS 41 and measured at fair value. The produce growing on bearer plants is within the scope of IAS 41 and measured at fair value1.
- Intangible Assets: In some cases, biological assets may be considered intangible assets if they do not have physical substance. For example, breeding rights or genetic traits in livestock could be intangible assets.
Biological assets are typically measured at fair value minus selling costs, as per International Accounting Standard 41 (IAS 41) for agriculture23. This means that the balance sheet valuation of these assets reflects their market value, which can be influenced by various factors such as market conditions, crop yields, and animal health.
2/28/2025 01:08am
