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IAS 41 — Fair value of biological assets growing on bearer plants

Date recorded:

Fair value of biological assets growing on bearer plants — Agenda Paper 7


The Interpretations Committee received a request to clarify whether, in applying IAS 41 Agriculture, there are circumstances in which an entity cannot reliably measure the fair value of growing produce (i.e. the produce from a bearer plant). The request related to palm oil and the valuation of palm oil fresh fruit bunches (which the paper abbreviates to FFB).

The staff collected views and information about how IAS 41 was being applied in practice to support their analysis.

Staff analysis on comment letters received

The feedback received indicated that a majority of entities applying IAS 41 measure biological assets (including produce growing on bearer plants) at fair value, indicating that they can do so reliably, including for palm oil FFB. The findings suggested that entities harvesting palm oil entities are able to determine a fair value measure for FFB using a discounted cash flow method on the basis of supportable assumptions.

The staff assessment was that the submitter is asking the Committee for clarity on how a particular industry sector should apply the requirements in paragraph 30 of IAS 41 in assessing whether fair value measurements are clearly unreliable. They are not seeking clarification on how to read the requirements or on which requirements to apply.

On the basis of their analysis, the staff thought that the requirements in existing IFRS Standards provide an adequate basis for an entity to account for growing produce on bearer plants, including FFB growing on oil palms.

Staff recommendation

The staff recommended that the Committee not add this issue to its agenda. Appendix A to this paper outlines the proposed wording of the tentative agenda decision, which notes that it is not the role of the Committee to provide answers to very specific application questions for particular industries.


The IC approved the Staff’s recommendation. The IC members agreed that this is an application issue that is beyond the ability and the remit of the committee. The IC suggested that the tentative agenda decision emphasise the following points:

  • Where the fair value measurement of growing produce is subject to significant measurement uncertainties, an entity should make the appropriate disclosures as required by IAS 1.
  • Encountering significant practical difficulties in a fair value measurement does not automatically mean that any fair value measurement of the growing produce is clearly unreliable.

Some IC members also suggested that the Staff use the IFRS 13 post-implementation review to elicit views on what type of educational material and/or fair value measurement guidance could be provided to affected entities to help them with the decision making process.


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