IAS 41 Agriculture—Subsequent expenditure (Agenda Paper 6)

Date recorded:


In its June 2019 meeting, the Committee discussed the subject of whether an entity shall capitalise or expense the costs related to the biological transformation of biological assets (subsequent expenditure) applying IAS 41. The submitter also considers given there is lack of guidance in IAS 41, IAS 41 should be amended in order to reduce diversity in practice and enhance comparability of financial information across entities in the same industry.  The Committee published a tentative agenda decision.

Most of the respondents agreed with the Committee's technical analysis. However, one respondent stated that the agenda decision is not helpful and references to IAS 8 should be added to address this. Another respondent stated that adding the matter to the Committee’s standard-setting agenda would be more appropriate to reduce the diversity in practice.

Staff analysis

In response to the comment letters, the staff think that it is inappropriate to add references to IAS 8, because the accounting of either capitalising or expensing the subsequent expenditure has no effect on the measurement of the biological asset (carried at fair value less cost to sell) or profit or loss. It only affects the presentation of amounts within the statement of profit or loss and adding references to IAS 1 would be more useful. The staff suggested to highlight these requirements in the agenda decision. With respect to suggested standard-setting, the staff continue to hold the view that the costs of such standard-setting would outweigh the benefits as there is no evidence that standard-setting would result in an improvement in financial reporting.

Staff recommendation

The staff recommend finalising the agenda decision subject to the above-mentioned changes.


Most of the Committee members agreed with the staff with regard to this accounting issue. They tended to agree with standard-setting but they acknowledged that it is a difficult decision to sustain that view based on one or two examples provided. The examples show that there is a broad range of biological assets and more research is required. Although there is no impact on the profit or loss number, some Committee members struggled with the question of whether the subsequent expenditure shall be separately presented on the face of the income statement. The staff suggested to add to the agenda decision that the expenditure can either be presented in the notes or on the face of the income statement. This is based on the requirements in IAS 1:99. The Committee decided, by a majority of votes, to finalise the agenda decision, with the addition discussed in the meeting.


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