How should an entity account for an obligation to replant a biological asset after harvest?
The IFRIC previously decided that it would not issue guidance on how to account for an obligation to replant a biological asset after harvest. What does the exclusion from taking into account increases in value from ‘additional biological transformation’ mean in the context of IAS 41.21? In particular, what is the implication of this exclusion where a valuation is based on forecast future cash flows (which can only be achieved after future biological growth)? At the November 2006 meeting the IFRIC focused the discussion on the content in paragraph 21 of IAS 41. IFRIC members supported removing the prohibition against taking into account future growth on biological assets. IFRIC members considered that market participants would take into account future growth when valuing these items and also commented that there are risk factors in future growth that should be considered when measuring those assets. The IFRIC then discussed whether agricultural assets should be measured according to it
