At its meeting on September 20-21, 2017, the AcSB deliberated the remaining issues related to the project scope, recognition and measurement, and made the following decisions:

Scope

The Board affirmed its preliminary view that timber producers should be included within the scope of the project, and directed staff to seek feedback on its proposals from stakeholders with knowledge of that industry.

Measurement

With regards to the remaining issues related to measurement, the Board decided:

• to clarify that cost is the most relevant measurement basis for agricultural inventories, and that net realizable value would be only permitted as a practical expedient under certain conditions.
• to obtain advice from its Agricultural Advisory Group on how possible conditions to determine when agricultural inventories would be measured at net realizable value could be modified to better meet Canadian stakeholders’ needs.
• not to provide further guidance on how unrealized gains and losses recognized in income would be presented on the face of the income statement as similar guidance is not provided for other industries in the existing standards. The Board will consider the need for disclosure about these unrealized gains and losses in November 2017.
• not to provide guidance on how to determine the unit of account for groups of productive biological assets or agricultural inventories as similar guidance is not provided for other industries in the existing standards.
• that the elements of cost for agricultural inventories and productive biological assets should be consistent with the current guidance in accounting standards for private enterprises. However, Board members asked for advice from its Agricultural Advisory Group on how to reduce the complexity for stakeholders when determining cost:
  
  • through the use of techniques and formulas; as well as
  • providing a practical expedient to exclude costs of conversion that cannot be allocated without undue cost or effort.
• to direct staff to begin drafting proposals to address the classification and measurement of productive biological assets when they undergo a change in use.
• that the current proposals are sufficient to capture challenges that stakeholders have raised in relation to products such as plant clippings, cannabis and perennial plants.

Next steps

The Board also decided that guidance on Agriculture should be issued in the form of a separate standard rather than as amendments to existing standards in Part II of the Handbook. Board members agreed that Section 3041 should be reserved for this guidance.

The Board considered a revised project timeline and decided to postpone issuing the exposure draft to no later than the third quarter of 2018. The additional time is to consider how the proposed new standard will respond to the sector’s needs.

Review the Executive Summary on the AcSB's Web site.