Amendments of IAS 16 and IAS 41 and the main changes on Agriculture: Bearer Plants

1250 Words Aug 28th, 2014 5 Pages
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Word counts: 1103 (excluding reference and appendices) Table of Contents
Part A: Introduction Part B: Amendments of IAS 16 and IAS 41 and the main changes on Agriculture: Bearer Plants.
Part C: Advantages and Disadvantages from the Amendments.
Part D: Treasury Wine Estate and the impact of the Exposure Draft.
Part E: Conclusion.
Part F: Reference List.

Part A: Introduction
IRFS published the Exposure Draft 2013/8 Agriculture: Bearer Plants about the amendments of IAS 16 and IAS 41. The Exposure Draft has changed the definition and accounting standards of Bearer Plants. This report will focus on outline the main changes, the advantages & disadvantage and the impact
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IRFS Foundation, (2013, p.5 ED) wrote a case that a Bear Plant is growth to bear products and also could be sold as living plants such as lumber, which is separately from scrap sale. The Expose Draft accounts the bear plant in this case to be in the range of IAS 41. However, IAS 16 and IAS 41 of the Expose Draft do not cover any case from this. Ghani, et.al (2013, p.1) explain that in such case, the Expose Draft should defined a new term “Consumable bearer biological assets”. The definition would support users and entities to be more accurate and not confused users in making decision.
Another disadvantage is the Expose Draft defined the Bear Plant before the stage of mature is “self-constructed” in IAS 16, paragraph 22A. The reason is the difference between the nature of bearer plant and other assets. First, the machine could be fixed and upgradeable in their life cycle while the bearer life may take more than 20 years in the growing stage and production stage (Ghani, et.al 2013, p.2). Therefore, it is inappropriate to defined immature Bearer Plant as “self-constructed” because of uncertainty from the nature.
Finally, it is difficult to use the depreciation method for Bearer Plant. EFRAG (2013, p.8) examines that bearer plant productivity base on the life cycle as it increase when it grow and decrease as it life reached. Therefore, the depreciate method of useful life or straight line method could

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