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Agriculture [Completed]

Effective date:

The new Section 3041 is effective for annual periods beginning on or after January 1, 2021, with earlier application permitted.

Last updated:

November 2019

Reach out to our Agriculture Specialist

Karen Higgins

Overview

The AcSB’s Private Enterprise Advisory Committee reviewed whether there were areas not adequately addressed by accounting standards for private enterprises. The Committee felt that there is a significant need for an accounting standard on agricultural activity.  

At its March 2011 meeting, the AcSB agreed to commence such a project. The process included a review of current practices, relevant accounting standards in other jurisdictions and consultations with financial statement users, preparers and advisors in the agriculture sector. The Private Enterprise Advisory Committee was consulted on an ongoing basis.

In July 2018, the AcSB is­sued an Ex­po­sure Draft ex­am­in­ing the ac­count­ing for agri­cul­tural in­ven­to­ries and pro­duc­tive bi­o­log­i­cal as­sets. Stake­hold­ers were en­cour­aged to sub­mit their com­ments by Oc­to­ber 31, 2018.

At its meeting on July 17, 2019, the AcSB approved the new standard, Section 3041, Agriculture. It was issued to Part II of the CPA Canada Handhook – Accounting in November 2019.

Section 3041 sets out the principles for the recognition, measurement and disclosure of agricultural inventories and productive biological assets. It applies to transactions and events related to agricultural production, including the purchase of the harvested product of biological assets for use in agricultural production.

The main features of Section 3041 are as follows:

  1. an agricultural producer recognizes agricultural inventories and productive biological assets in accordance with the definitions provided;
  2. there is a rebuttable presumption that biological assets not being used in a productive capacity are agricultural inventories;
  3. an agricultural producer chooses to measure agricultural inventories using: (a) the cost model or (b) the net realizable value model when the following conditions are met: the product has a reliable, readily determinable and realizable market price; the product has reliably measurable and predictable costs of disposal; and the product is available for immediate delivery;
  4. an agricultural producer that measures agricultural inventories using the cost model chooses whether to determine cost using full cost or only input costs; and
  5. an agricultural producer that chooses to measure agricultural inventories using the net realizable value model when the conditions are met uses cost when the conditions are not met.

Productive biological assets are measured at cost and amortized over their useful lives. Some productive biological assets are managed on a collective basis to maintain their collective productive capacity indefinitely. Such productive biological assets have an indefinite useful life and are not subject to amortization. A productive biological asset is not reclassified to agricultural inventory.

An agricultural producer discloses qualitative and quantitative information about the amounts recognized in its financial statements from agricultural inventories and productive biological assets.

The new Section 3041 is effective for annual periods beginning on or after January 1, 2021, with earlier application permitted.

 

Other developments

November 2019

On November 1, 2019, the AcSB released its Basis for Conclusions, which sets out how the AcSB reached its conclusions on the Agriculture project, and discussions on significant matters arising from comments received and issues raised in response to its Exposure Draft.

January 2019

In January 2019, the AcSB staff updated the status of this project to indicate that the AcSB expects to issue the final Handbook material in Q4/2019.

July 2018

On July 9, 2018, the AcSB issued an Exposure Draft examining the accounting for agricultural inventories and productive biological assets. Stakeholders are encouraged to submit their comments by October 31, 2018.

August 2016

In August 2016, the AcSB staff updated the status of this project to indicate that the AcSB is continuing to deliberate the comments on its Discussion Paper and no longer expects to approve the final Handbook material in Q4/2016.

June 2016

In June 2016, the AcSB staff updated this project to indicate that the AcSB expects to approve the final Handbook material in Q4/2016.

December 2015

On December 18, 2015, the AcSB issued a Discussion Paper that considers issues in accounting for biological assets and agricultural produce. Stakeholders are encouraged to submit their comments by May 19, 2016. This Discussion Paper aims to obtain broad input from stakeholders, in particular, those involved in the agricultural sector. This input will assist the AcSB in deciding whether to develop authoritative guidance, either by developing a new standard or amending existing standards, on accounting for biological assets and agricultural produce by private enterprises and, if so, the issues to be addressed and how they could be addressed. The AcSB will consider the input received in response to this Discussion Paper and decide whether to continue this project to develop authoritative guidance. If the AcSB decides to proceed, then it will develop an exposure draft of proposed changes to accounting standards for private enterprises for public comment, in accordance with its due process.

May 2013

In May 2013, the AcSB discussed the contents of its forthcoming Discussion Paper (DP) on Agriculture in respect of impairment, presentation and disclosure.  The AcSB agreed that the DP should present a view that biological assets are inventories or property, plant and equipment, and the impairment model applied should reflect an asset’s classification.  The AcSB also agreed that biological assets should be presented on the balance sheet in accordance with the existing standards for inventories and property, plant and equipment. The AcSB also reviewed a list of potential disclosures for inclusion in the discussion paper.

March 2011

In March 2011, the AcSB agreed to commence a project on accounting for agricultural activities.

 

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