PBE IPSAS 27

Agriculture

Mandatory Date:
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Statement of Authority

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PUBLIC BENEFIT ENTITY INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARD 27 AGRICULTURE (PBE IPSAS 27)

Issued September 2014 and incorporates amendments to 31 December 2022

This Standard was issued on 11 September 2014 by the New Zealand Accounting Standards Board of the External Reporting Board pursuant to section 12(a) of the Financial Reporting Act 2013.

This Standard is a disallowable instrument for the purposes of the Legislation Act 2012, and pursuant to section 27(1) of the Financial Reporting Act 2013 takes effect on 9 October 2014.

Reporting entities that are subject to this Standard are required to apply it in accordance with the effective dates in paragraphs 57.1 to 57.6.

In finalising this Standard, the New Zealand Accounting Standards Board has carried out appropriate consultation in accordance with section 22(1) of the Financial Reporting Act 2013.

This Tier 1 and Tier 2 PBE Standard has been issued as part of a revised full set of PBE Standards that incorporate enhancements for not-for-profit public benefit entities.

This Standard, when applied, supersedes PBE IPSAS 27 Agriculture issued in May 2013.

Copyright

© External Reporting Board (XRB) 2014

This XRB standard contains copyright material and reproduces, with the permission of the International Federation of Accountants (IFAC), parts of the corresponding international standard issued by the International Public Sector Accounting Standards Board (IPSASB), and published by IFAC. Reproduction within New Zealand in unaltered form (retaining this notice) is permitted for personal and non-commercial use subject to the inclusion of an acknowledgement of the source.

Requests and enquiries concerning reproduction and rights for commercial purposes within New Zealand should be addressed to the Chief Executive, External Reporting Board at the following email address: enquiries@xrb.govt.nz

All existing rights (including copyrights) in this material outside of New Zealand are reserved by IFAC, with the exception of the right to reproduce for the purposes of personal use or other fair dealing. Further information can be obtained from IFAC at www.ifac.org or by writing to permissions@ifac.org

ISBN 978-1-927292-44-0

How to read this Standard

Public Benefit Entity International Public Sector Accounting Standard 27 Agriculture is set out in paragraphs 1–58. All the paragraphs have equal authority. PBE IPSAS 27 should be read in the context of its objective, the NZASB’s Basis for Conclusions on PBE IPSAS 27, the IPSASB’s Basis for Conclusions on IPSAS 27, the Public Benefit Entities’ Conceptual Framework and Standard XRB A1 Application of the Accounting Standards Framework. PBE IPSAS 3 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance.

1. The objective of this Standard is to prescribe the accounting treatment and disclosures for agricultural activity.

2. An entity that prepares and presents financial statements shall apply this Standard for the following when they relate to agricultural activity:

  1. Biological assets, except for bearer plants; and

  2. Agricultural produce at the point of harvest.

3. This Standard does not apply to:

  1. Land related to agricultural activity (see PBE IPSAS 16 Investment Property and PBE IPSAS 17 Property, Plant and Equipment); 

  2. Bearer plants related to agricultural activity (see PBE IPSAS 17). However, this Standard applies to the produce on those bearer plants;

  3. Intangible assets related to agricultural activity (see PBE IPSAS 31 Intangible Assets); and

  4. Biological assets held for the provision or supply of services.

4. Biological assets are used in many activities undertaken by public benefit entities. When biological assets are used for research, education, transportation, entertainment, recreation, customs control or in any other activities that are not agricultural activities as defined in paragraph 9 of this Standard, those biological assets are not accounted for in accordance with this Standard. Where those biological assets meet the definition of an asset, other PBE Standards should be considered in determining the appropriate accounting (e.g., PBE IPSAS 12 Inventories and PBE IPSAS 17).

5. This Standard is applied to agricultural produce, which is the harvested produce of the entity’s biological assets, at the point of harvest. Thereafter, PBE IPSAS 12, or another applicable Standard, is applied. Accordingly, this Standard does not deal with the processing of agricultural produce after harvest; for example, the processing of grapes into wine by a vintner who has grown the grapes. While such processing may be a logical and natural extension of agricultural activity, and the events taking place may bear some similarity to biological transformation, such processing is not included within the definition of agricultural activity in this Standard.

6. The table below provides examples of biological assets, agricultural produce, and products that are the result of processing after harvest:

Biological assets

Agricultural produce

Products that are the result of processing after harvest

Sheep

Wool

Yarn, carpet

Trees in a timber plantation

Felled trees

Logs, lumber

Dairy cattle

Milk

Cheese

Pigs

Carcass

Sausages, cured hams

Cotton plants

Harvested cotton

Thread, clothing

Sugarcane

Harvested cane

Sugar

Tobacco plants

Picked leaves

Cured tobacco

Tea bushes

Picked leaves

Tea

Grape vines

Picked grapes

Wine

Fruit trees

Picked fruit

Processed fruit

Oil palms

Picked fruit

Palm oil

Rubber trees

Harvested latex

Rubber products

Some plants, for example, tea bushes, grape vines, oil palms and rubber trees, usually meet the definition of a bearer plant and are within the scope of PBE IPSAS 17. However, the produce growing on bearer plants, for example, tea leaves, grapes, oil palm fruit and latex, is within the scope of PBE IPSAS 27.

7. [Not used]

7.1 This Standard applies to Tier 1 and Tier 2 public benefit entities.

7.2 A Tier 2 entity is not required to comply with the disclosure requirements in this Standard denoted with an asterisk (*). Where a Tier 2 entity elects to apply a disclosure concession it shall comply with any RDR paragraphs associated with that concession.

8. [Not used]

Agriculture-related Definitions

9. The following terms are used in this Standard with the meanings specified:

Agricultural activity is the management by an entity of the biological transformation and harvest of biological assets for:

  • Sale;

  • Distribution at no charge or for a nominal charge; or

  • Conversion into agricultural produce or into additional biological assets for sale or for distribution at no charge or for a nominal charge.

Agricultural produce is the harvested produce of the entity’s biological assets.

bearer plant is a living plant that:

  1. Is used in the production and supply of agricultural produce;

  2. Is expected to bear produce for more than one period; and

  3. Has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.

A biological asset is a living animal or plant.

Biological transformation comprises the processes of growth, degeneration, production, and procreation that cause qualitative or quantitative changes in a biological asset.

Costs to sell are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income taxes. Disposal may occur through sale or through distribution at no charge or for a nominal charge.

A group of biological assets is an aggregation of similar living animals or plants.

Harvest is the detachment of produce from a biological asset or the cessation of a biological asset’s life processes.

9A. The following are not bearer plants:

  1. Plants cultivated to be harvested as agricultural produce (for example, trees grown for use as lumber);

  2. Plants cultivated to produce agricultural produce when there is more than a remote likelihood that the entity will also harvest and sell the plant as agricultural produce, other than as incidental scrap sales (for example, trees that are cultivated for their fruit and their lumber); and

  3. Annual crops (for example, maize and wheat).

9B. When bearer plants are no longer used to bear produce they might be cut down and sold as scrap, for example, for use as firewood. Such incidental scrap sales would not prevent the plant from satisfying the definition of a bearer plant.

9C. Produce growing on bearer plants is a biological asset.

10. Agricultural activity covers a diverse range of activities; for example, raising livestock, forestry, annual or perennial cropping, cultivating orchards and plantations, floriculture, and aquaculture (including fish farming). Certain common features exist within this diversity:

  1. Capability to change. Living animals and plants are capable of biological transformation;

  2. Management of change. Management facilitates biological transformation by enhancing, or at least stabilising, conditions necessary for the process to take place (for example, nutrient levels, moisture, temperature, fertility, and light). Such management distinguishes agricultural activity from other activities. For example, harvesting from unmanaged sources (such as ocean fishing and deforestation) is not agricultural activity; and

  3. Measurement of change. The change in quality (for example, genetic merit, density, ripeness, fat cover, protein content, and fibre strength) or quantity (for example, progeny, weight, cubic meters, fibre length or diameter, and number of buds) brought about by biological transformation or harvest is measured and monitored as a routine management function.

11. Biological transformation results in the following types of outcomes:

  1. Asset changes through (i) growth (an increase in quantity or improvement in quality of an animal or plant), (ii) degeneration (a decrease in the quantity or deterioration in quality of an animal or plant), or (iii) procreation (creation of additional living animals or plants); or

  2. Production of agricultural produce such as latex, tea leaf, wool, and milk.

General Definitions

12. Terms defined in other PBE Standards are used in this Standard with the same meaning as in those Standards, and are reproduced in the Glossary of Defined Terms published separately.

13. An entity shall recognise a biological asset or agricultural produce when and only when:

  1. The entity controls the asset as a result of past events;

  2. It is probable that future economic benefits or service potential associated with the asset will flow to the entity; and

  3. The fair value or cost of the asset can be measured reliably.1

14. The fair value of an asset is based on its present location and condition. As a result, for example, the fair value of cattle at a farm is the price for the cattle in the relevant market less the transport and other costs of getting the cattle either to that market or to the location where it will be distributed at no charge or for a nominal charge.

15. In agricultural activity, control may be evidenced by, for example, legal ownership of cattle and the branding or otherwise marking of the cattle on acquisition, birth, or weaning. The future benefits or service potential are normally assessed by measuring the significant physical attributes.

16. A biological asset shall be measured on initial recognition and at each reporting date at its fair value less costs to sell, except for the case described in paragraph 34 where the fair value cannot be measured reliably.

17. Where an entity acquires a biological asset through a non-exchange transaction, the biological asset is measured on initial recognition and at each reporting date in accordance with paragraph 16.

18. Agricultural produce harvested from an entity’s biological assets shall be measured at its fair value less costs to sell at the point of harvest. Such measurement is the cost at that date when applying PBE IPSAS 12, or another applicable Standard.

19. The determination of fair value for a biological asset or agricultural produce may be facilitated by grouping biological assets or agricultural produce according to significant attributes; for example, by age or quality. An entity selects the attributes corresponding to the attributes used in the market as a basis for pricing.

20. Entities often enter into contracts to sell their biological assets or agricultural produce at a future date. Contract prices are not necessarily relevant in determining fair value, because fair value reflects the current market in which a willing buyer and seller would enter into a transaction. As a result, the fair value of a biological asset or agricultural produce is not adjusted because of the existence of a contract. In some cases, a contract for the sale of a biological asset or agricultural produce in an exchange transaction may be an onerous contract, as defined in PBE IPSAS 19 Provisions, Contingent Liabilities and Contingent Assets. PBE IPSAS 19 applies to onerous contracts.

21. If an active market exists for a biological asset or agricultural produce in its present location and condition, the quoted price in that market is the appropriate basis for determining the fair value of that asset. If an entity has access to different active markets, the entity uses the most relevant one. For example, if an entity has access to two active markets, it would use the price existing in the market expected to be used.

22. If an active market does not exist, an entity uses one or more of the following, when available, in determining fair value:

  1. The most recent market transaction price, provided that there has not been a significant change in economic circumstances between the date of that transaction and the reporting date;

  2. Market prices for similar assets with adjustment to reflect differences; and

  3. Sector benchmarks such as the value of an orchard expressed per export tray, bushel, or hectare, and the value of cattle expressed per kilogram of meat.

23. In some cases, the information sources listed in paragraph 22 may suggest different conclusions as to the fair value of a biological asset or agricultural produce. An entity considers the reasons for those differences, in order to arrive at the most reliable estimate of fair value within a relatively narrow range of reasonable estimates.

24. In some circumstances, market-determined prices or values may not be available for a biological asset in its present condition. In these circumstances, an entity uses the present value of expected net cash flows from the asset discounted at a current market-determined rate in determining fair value.

25. The objective of a calculation of the present value of expected net cash flows is to determine the fair value of a biological asset in its present location and condition. An entity considers this in determining an appropriate discount rate to be used and in estimating expected net cash flows. In determining the present value of expected net cash flows, an entity includes the net cash flows that market participants would expect the asset to generate in its most relevant market.

26. An entity does not include any cash flows for financing the assets or re-establishing biological assets after harvest (for example, the cost of replanting trees in a plantation forest after harvest).

27. In agreeing an arm’s length transaction price, knowledgeable, willing buyers and sellers consider the possibility of variations in cash flows. It follows that fair value reflects the possibility of such variations. Accordingly, an entity incorporates expectations about possible variations in cash flows into either the expected cash flows, or the discount rate, or some combination of the two. In determining a discount rate, an entity uses assumptions consistent with those used in estimating the expected cash flows, to avoid the effect of some assumptions being double-counted or ignored.

28. Cost may sometimes approximate fair value, particularly when:

  1. Little biological transformation has taken place since initial cost incurrence (for example, for seedlings planted immediately prior to reporting date or newly acquired livestock); or

  2. 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).

29. Biological assets are often physically attached to land (for example, trees in a plantation forest). There may be no separate market for biological assets that are attached to the land but an active market may exist for the combined assets, that is, for the biological assets, raw land, and land improvements, as a package. An entity may use information regarding the combined assets to determine fair value for the biological assets. For example, the fair value of raw land and land improvements may be deducted from the fair value of the combined assets to arrive at the fair value of biological assets.

Gains and Losses

30. A gain or loss arising on initial recognition of a biological asset at fair value less costs to sell and from a change in fair value less costs to sell of a biological asset shall be included in surplus or deficit for the period in which it arises.

31. A loss may arise on initial recognition of a biological asset, because costs to sell are deducted in determining fair value less costs to sell of a biological asset. A gain may arise on initial recognition of a biological asset, such as when a calf is born.

32. A gain or loss arising on initial recognition of agricultural produce at fair value less costs to sell shall be included in surplus or deficit for the period in which it arises.

33. A gain or loss may arise on initial recognition of agricultural produce as a result of harvesting.

Inability to Measure Fair Value Reliably

34. There is a presumption that fair value can be measured reliably for a biological asset. However, that presumption can be rebutted only on initial recognition for a biological asset for which market- determined prices or values are not available, and for which alternative estimates of fair value are determined to be clearly unreliable. In such a case, that biological asset shall be measured at its cost less any accumulated depreciation and any accumulated impairment losses. Once the fair value of such a biological asset becomes reliably measurable, an entity shall measure it at its fair value less costs to sell. Once a non-current biological asset meets the criteria to be classified as held for sale (or is included in a disposal group that is classified as held for sale) in accordance with PBE IFRS 5 Non- current Assets Held for Sale and Discontinued Operations, it is presumed that fair value can be measured reliably.

35. The presumption in paragraph 34 can be rebutted only on initial recognition. An entity that has previously measured a biological asset at its fair value less costs to sell continues to measure the biological asset at its fair value less costs to sell until disposal.

36. In all cases, an entity measures agricultural produce at the point of harvest at its fair value less costs to sell. This Standard reflects the view that the fair value of agricultural produce at the point of harvest can always be measured reliably.

37. In determining cost, accumulated depreciation and accumulated impairment losses, an entity considers PBE IPSAS 12, PBE IPSAS 17, PBE IPSAS 21 Impairment of Non-Cash-Generating Assets and PBE IPSAS 26 Impairment of Cash-Generating Assets.

1Information that is reliable is free from material error and bias, and can be depended on by users to faithfully represent that which it purports to represent or could reasonably be expected to represent. Paragraph BC10 of PBE IPSAS 1 Presentation of Financial Reports discusses the transitional approach to the explanation of reliability.

General

*38. An entity shall disclose the aggregate gain or loss arising during the current period on initial recognition of biological assets and agricultural produce and from the change in fair value less costs to sell of biological assets.

39. An entity shall provide a description of biological assets that distinguishes between consumable and bearer biological assets and between biological assets held for sale and those held for distribution at no charge or for a nominal charge.

RDR39.1 A Tier 2 entity is not required to distinguish between consumable and bearer biological assets as required by paragraph 39.

*40. Consumable biological assets are those that are held for harvest as agricultural produce or for sale or distribution at no charge or for a nominal charge as biological assets. Examples of consumable biological assets are animals and plants for one-time use, such as livestock intended for the production of meat, livestock held for sale, fish in farms, crops such as maize and wheat, produce on a bearer plant and trees being grown for lumber. Bearer biological assets are those biological assets that are used repeatedly or continuously for more than one year in an agricultural activity. Bearer biological assets are not agricultural produce but, rather, are held to bear produce. Examples of types of animals that are bearer biological assets include breeding stocks (including fish and poultry), livestock from which milk is produced, and sheep or other animals used for wool production. Examples of types of plants that are bearer biological assets include trees from which fruit is harvested, vines and shrubs cultivated for the harvest of fruits, nuts, sap, resin, bark and leaf products.

*41. The disclosures required by paragraph 39 would take the form of a quantified description. The quantified description may be accompanied by a narrative description.

*42. In making the disclosures required by paragraph 39, an entity is also encouraged to distinguish between mature and immature biological assets, as appropriate. These distinctions provide information that may be helpful in assessing the timing of future cash flows and service potential. An entity discloses the basis for making any such distinctions.

*43. Mature biological assets are those that have attained harvestable specifications (for consumable biological assets) or are able to sustain regular harvests (for bearer biological assets).

*44. If not disclosed elsewhere in information published with the financial statements, an entity shall describe:

  1. The nature of its activities involving each group of biological assets; and

  2. Non-financial measures or estimates of the physical quantities of:

    1. Each group of the entity’s biological assets at the end of the period; and

    2. Output of agricultural produce during the period.

45. An entity shall disclose the methods and significant assumptions applied in determining the fair value of each group of agricultural produce at the point of harvest and each group of biological assets.

*46. An entity shall disclose the fair value less costs to sell of agricultural produce harvested during the period, determined at the point of harvest.

*47. An entity shall disclose:

  1. The existence and carrying amounts of biological assets whose title is restricted, and the carrying amounts of biological assets pledged as security for liabilities;

  2. The nature and extent of restrictions on the entity’s use or capacity to sell biological assets;

  3. The amount of commitments for the development or acquisition of biological assets; and

  4. Financial risk management strategies related to agricultural activity.

48. An entity shall present a reconciliation of changes in the carrying amount of biological assets between the beginning and the end of the current period. The reconciliation shall include:

  1. The gain or loss arising from changes in fair value less costs to sell, disclosed separately for bearer biological assets and consumable biological assets;

  2. Increases due to purchases;

  3. Increases due to assets acquired through a non-exchange transaction;

  4. Decreases attributable to sales and biological assets classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with PBE IFRS 5;

  5. Decreases due to distributions at no charge or for a nominal charge;

  6. Decreases due to harvest;

  7. Increases resulting from PBE combinations;

  8. * Net exchange differences arising on the translation of financial statements into a different presentation currency, and on the translation of a foreign operation into the presentation currency of the reporting entity; and

  9. Other changes.

RDR48.1 A Tier 2 entity is not required to disclose the reconciliation specified in paragraph 48 for prior periods.

RDR48.2 A Tier 2 entity is not required to disclose separately the gain or loss arising from changes in fair value less costs to sell for biological assets and consumable biological assets as specified in paragraph 48(a).

*49. The fair value less costs to sell of a biological asset can change due to both physical changes and price changes in the market. Separate disclosure of physical and price changes is useful in appraising current period performance and future prospects, particularly when there is a production cycle of more than one year. In such cases, an entity is encouraged to disclose, by group or otherwise, the amount of change in fair value less costs to sell included in surplus or deficit due to physical changes and due to price changes. This information is generally less useful when the production cycle is less than one year (for example, when raising chickens or growing cereal crops).

*50. Biological transformation results in a number of types of physical change—growth, degeneration, production, and procreation, each of which is observable and measurable. Each of those physical changes has a direct relationship to future economic benefits or service potential. A change in fair value of a biological asset due to harvesting is also a physical change.

51. Agricultural activity is often exposed to climatic, disease and other natural risks. If an event occurs that gives rise to a material item of revenue or expense, the nature and amount of that item are disclosed in accordance with PBE IPSAS 1 Presentation of Financial Reports. Examples of such an event include an outbreak of a virulent disease, a flood, a severe drought or frost, and a plague of insects.

Additional Disclosures for Biological Assets Where Fair Value Cannot Be Measured Reliably

52. If an entity measures biological assets at their cost less any accumulated depreciation and any accumulated impairment losses (see paragraph 34) at the end of the period, the entity shall disclose for such biological assets:

  1. A description of the biological assets;

  2. An explanation of why fair value cannot be measured reliably;

  3. * If possible, the range of estimates within which fair value is highly likely to lie;

  4. The depreciation method used;

  5. The useful lives or the depreciation rates used; and

  6. The gross carrying amount and the accumulated depreciation (aggregated with accumulated impairment losses) at the beginning and end of the period.

*53. If, during the current period, an entity measures biological assets at their cost less any accumulated depreciation and any accumulated impairment losses (see paragraph 34), an entity shall disclose any gain or loss recognised on disposal of such biological assets and the reconciliation required by paragraph 48 shall disclose amounts related to such biological assets separately. In addition, the reconciliation shall include the following amounts included in surplus or deficit related to those biological assets:

  1. Impairment losses;

  2. Reversals of impairment losses; and

  3. Depreciation.

*54. If the fair value of biological assets previously measured at their cost less any accumulated depreciation and any accumulated impairment losses becomes reliably measurable during the current period, an entity shall disclose for those biological assets:

  1. A description of the biological assets;

  2. An explanation of why fair value has become reliably measurable; and

  3. The effect of the change.

55. [Not used]

56–57. [Not used]

57.1 A public benefit entity shall apply this Standard for annual financial statements covering periods beginning on or after 1 April 2015. Earlier application is permitted for not-for-profit public benefit entities as long as the full suite of PBE Standards is applied at the same time.

57.2 2016 Omnibus Amendments to PBE Standards, issued in January 2017, added a footnote to paragraph 13. An entity shall apply that amendment for annual financial statements covering periods beginning on or after 1 January 2017.

57.3 2016 Omnibus Amendments to PBE Standards, issued in January 2017, amended paragraphs 2, 3, 5, 6, 9, 28 and 40 and added paragraphs 9A, 9B and 9C. An entity shall apply those amendments for annual financial statements covering periods beginning on or after 1 January 2018. Earlier application is permitted. If an entity applies those amendments for an earlier period it shall disclose that fact.

57.4 In the reporting period when the amendments from 2016 Omnibus Amendments to PBE Standards are first applied an entity need not disclose the quantitative information required by paragraph 33(f) of PBE IPSAS 3 for the current period. However, an entity shall present the quantitative information required by paragraph 33(f) of PBE IPSAS 3 for each prior period presented.

57.5 PBE IPSAS 40 PBE Combinations issued in July 2019, amended paragraph 48. An entity shall apply that amendment when it applies PBE IPSAS 40.

57.6 2022 Omnibus Amendments to PBE Standards, issued in June 2022, amended paragraph 26. An entity shall apply these amendments for annual financial statements covering periods beginning on or after 1 January 2023. Earlier application is permitted. If an entity applies the amendments for an earlier period, it shall disclose that fact.

58. This Standard, when applied, supersedes PBE IPSAS 27 Agriculture issued in May 2013.

This Basis for Conclusions accompanies, but is not part of, PBE IPSAS 27.

BC1. The New Zealand Accounting Standards Board (NZASB) has modified IPSAS 27 Agriculture for application by Tier 1 and Tier 2 public benefit entities. Where applicable, disclosure concessions have been identified for Tier 2 entities and the language generalised for use by public benefit entities. The NZASB considered that the requirements of IPSAS 27 are generally appropriate for application by public benefit entities.

Biological Assets held for the Provision or Supply of Services

BC2. The NZASB noted that the IPSASB had excluded biological assets held for the provision or supply of services from the scope of IPSAS 27, and after considering the IPSASB’s reason for making this exclusion, agreed to retain the scope exclusion in PBE IPSAS 27. The IPSASB had considered whether biological assets such as horses and dogs used for policing purposes and plants and trees in parks and gardens operated for recreational purposes would fall within the scope of IPSAS 27. The IPSASB concluded that such biological assets are not held for use in an agricultural activity because they are not routinely managed for the purpose of measuring and monitoring the change in quality or quantity brought about by biological transformation or harvest, as described in paragraph 10. In order to clarify that such biological assets are not dealt with in this Standard the IPSASB decided to include a scope exclusion stating that the Standard does not apply to biological assets held for the provision or supply of services.

2016 Omnibus Amendments to PBE Standards

BC3. The IASB issued Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) in June 2014. The IASB’s amendments required bearer plants to be accounted for as property, plant and equipment and included within the scope of IAS 16 Property, Plant and Equipment instead of IAS 41 Agriculture. The produce growing on bearer plants remained within the scope of IAS 41. In Improvements to IPSASs 2015 the IPSASB made equivalent amendments to IPSAS 27. The NZASB subsequently made equivalent amendments to PBE IPSAS 27 as part of the 2016 Omnibus Amendments to PBE Standards.

2022 Omnibus Amendments to PBE Standards

BC4. Annual Improvements to IFRS® Standards (2018-2020), issued by the IASB in May 2020, amended IAS 41 Agriculture. The amendments removed the exclusion of taxation cash flows when measuring fair value in IAS 41. The IASB noted in its Basis for Conclusions that before this amendment, IAS 41 had required an entity to use pre-tax cash flows when measuring fair value but did not require the use of a pre-tax discount rate to discount those cash flows. In 2021, the IPSASB had proposed to include a similar amendment in IPSAS 27 Agriculture as part of its project on Measurement. Given the minor nature of the abovementioned amendment, the NZASB amended PBE IPSAS 27 in 2022 Omnibus Amendments to PBE Standards, ahead of the IPSASB completing its project on Measurement.

These examples accompany, but are not part of, PBE IPSAS 27.

Extracts from statements of comprehensive revenue and expense and statements of financial position are provided to show the effects of the transactions described below. These extracts do not necessarily conform to all the disclosure and presentation requirements of other Standards.

The first example illustrates how the disclosure requirements of this Standard might be put into practice for a dairy farming entity. This Standard encourages the separation of the change in fair value less costs to sell of an entity’s biological assets into physical change and price change. That separation is reflected in the first example. The second example illustrates how to separate physical change and price change.

Disclosure Requirements

Statement of Financial Position

Statement of Comprehensive Revenue and Expense

Statement of Changes in Net Assets/Equity

Cash Flow Statement3

Notes

1. Operations and Principal Activities

Entity XYZ (“the Entity”) is engaged in milk production. At December 31, 20X8, the Entity held 419 cows able to produce milk (mature bearer assets) and 137 heifers being raised to produce milk in the future (immature bearer assets). The Entity produced 157,584kg of milk with a fair value less costs to sell of CU518,240 (the fair value of this agricultural produce is determined at the time of milking) in the year ended December 31, 20X8. The Entity does not own any consumable biological assets.

2. Accounting Policies

Livestock and Milk

Livestock are measured at their fair value less costs to sell. The fair value of livestock is determined based on market prices of livestock of similar age, breed, and genetic merit. Milk is initially measured at its fair value less costs to sell at the time of milking. The fair value of milk is determined based on market prices in the local area.

3. Biological Assets

Reconciliation of Carrying Amounts of Dairy Livestock

20X8

CU

Carrying amount at January 1, 20X8

459,570

Increases due to purchases

26,250

Gain arising from changes in fair value less costs to sell attributable to physical changes4

15,350

Gain arising from changes in fair value less costs to sell attributable to price changes5

24,580

Decreases due to sales

(100,700)

image

Carrying amount at December 31, 20X8

425,050

image

4. Financial Risk Management Strategies

The Entity is exposed to financial risks arising from changes in milk prices. The Entity does not anticipate that milk prices will decline significantly in the foreseeable future and, therefore, has not entered into derivative or other contracts to manage the risk of a decline in milk prices. The Entity reviews its outlook for milk prices regularly in considering the need for active financial risk management.

Physical Change and Price Change

The following example illustrates how to separate physical change and price change. Separating the change in fair value less costs to sell between the portion attributable to physical changes and the portion attributable to price changes is encouraged but not required by this Standard.

3This statement of cash flows reports cash flows from operating activities using the direct method. PBE IPSAS 2 Cash Flow Statements requires that an entity reports cash flows from operating activities using either the direct method or the indirect method. PBE IPSAS 2 encourages use of the direct method.

4 Separating the increase in fair value less costs to sell between the portion attributable to physical changes and the portion attributable to price changes is encouraged but not required by this Standard.

5 See Footnote 4.

PBE IPSAS 27 Agriculture is drawn from IPSAS 27 Agriculture. PBE Standards require the presentation of a statement of comprehensive revenue and expense. IPSASs require the presentation of a statement of financial performance. Other than the impact of this difference, there are no significant differences between PBE IPSAS 27 and IPSAS 27.

Table of Pronouncements – PBE IPSAS 27 Agriculture

PBE IPSAS 27 Agriculture was issued in September 2014.

This table lists the pronouncements establishing and substantially amending PBE IPSAS 27. The table is based on amendments issued as at 31 December 2022.

Pronouncements

Date issued

Early operative date

Effective date (annual financial statements … on or after …)

PBE IPSAS 27 Agriculture

Sept 2014

Early application is permitted for not-for-profit public benefit entities

1 April 2015

2016 Omnibus Amendments to PBE Standards

Jan 2017

Varies

Various: 1 Jan 2017

and 1 Jan 2018

PBE FRS 48 Service Performance Reporting

Nov 2017

Early application is permitted

1 Jan 20226

PBE IPSAS 40 PBE Combinations

July 2019

Early application is permitted

1 Jan 2021

Editorial Corrections to PBE Standards

Dec 2021

2022 Omnibus Amendments to PBE Standards

June 2022

Early application is permitted

1 Jan 2023

Table of Amended Paragraphs in PBE IPSAS 27

Paragraph affected

How affected

By … [date]

Paragraph 2

Amended

2016 Omnibus Amendments to PBE Standards [Jan 2017]

Paragraph 3

Amended

2016 Omnibus Amendments to PBE Standards [Jan 2017]

Paragraph 5

Amended

2016 Omnibus Amendments to PBE Standards [Jan 2017]

Paragraph 6

Amended

2016 Omnibus Amendments to PBE Standards [Jan 2017]

Paragraph 9

Amended

2016 Omnibus Amendments to PBE Standards [Jan 2017]

Paragraphs 9A–9C

Added

2016 Omnibus Amendments to PBE Standards [Jan 2017]

Paragraph 13

Amended

2016 Omnibus Amendments to PBE Standards [Jan 2017]

Paragraph 13

Amended

PBE FRS 48 [Nov 2017]

Paragraph 26

Amended

2022 Omnibus Amendments to PBE Standards [June 2022]

Paragraph 28

Amended

2016 Omnibus Amendments to PBE Standards [Jan 2017]

Paragraph 40

Amended

2016 Omnibus Amendments to PBE Standards [Jan 2017]

Paragraph 48

Amended

PBE IPSAS 40 [July 2019]

Paragraph 51

Amended

PBE FRS 48 [Nov 2017]

Paragraphs 57.2–57.4

Added

2016 Omnibus Amendments to PBE Standards [Jan 2017]

Paragraph 57.5

Added

PBE IPSAS 40 [July 2019]

Paragraph 57.6

Added

2022 Omnibus Amendments to PBE Standards [June 2022]

62020 Amendments to PBE FRS 48, issued in August 2020, deferred the effective date of PBE FRS 48 from 1 January 2021 to 1 January 2022.