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IAS 41 — Disclosure of the components of changes in fair value and associates valuation techniques

Date recorded:

The Committee received a request to address an issue related to a disclosure requirement of IAS 41 Agriculture and the implication that this disclosure may have on the valuation of some biological assets measured at fair value less costs to sell.

The submitter's concern was that the disclosure requirement per paragraph 51 of IAS 41 may contribute to an unacceptable application of fair value in measuring biological assets.

The staff recommended the Committee not take the item on to its agenda on the basis that: a) the appropriateness of using a market approach will depend on the facts and circumstances specific to entities' biological assets as well as the way in which the market approach is applied; b) paragraph 51 of IAS 41 is an encouraged disclosure requirement and not a measurement requirement; and c) the outreach that was carried out indicated that the issue was not widespread and that those using a market approach do not refer to paragraph 51 of IAS 41.

The Committee noted that paragraph 51 of IAS 41 addresses disclosures, not measurement, and that the guidance in measuring fair value is contained within IFRS 13 Fair Value Measurement. Consequently, the Committee tentatively agreed not to add this issue to its agenda because it believes that IFRS 13 provides the principles that need to be applied in measuring fair value.

The Committee also noted that the IFRS Foundation is planning to provide educational material to supplement IFRS 13 in the latter part of 2012 and that this educational material will include biological asset valuations as one of the topics.

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