PAS 41: Agriculture - Cropping (plants)

- Floriculture (flowers)
Agricultural Activity - Aquamarine
- Management by an entity of the biological transformation and;
- And harvest of biological assets for sale or for conversion into agricultural produce Common Features:
or into additional bio assets 1. Capability to change
- Living animal/plants are capable of biological transformation.
A. Biological Transformation - Ex. Grow, reproduce, etc.
- Process of growth (lumaki) 2. Management of change
- Degeneration (bumaba value) - Facilitates biological transformation. Enhancing/stabilizing conditions.
- Production (of agri produce eg. milk) and - Ex. Pinapakain nang maayos ng nutritious feeds para tumaas production.
- Procreation (creation of additional living plant/animal) - Ex. May fertilizers yung halaman.
B. Biological Asset - Exception:
- Living animal or plant. - Ex. Sardines Company na nanghuhuli sa dagat = hindi biological
- Ex. Pwede dumami ang alagang baboy and puno. asset kasi hindi naman mina-manage/control. Hindi agricultural
C. Agricultural Produce activity.
- Harvested produce of B.A. - Ex. Logging of trees/Hunting = Pupunta sa forest kahit di sila
- Hinaharvest from biological asset. nagtanim. Hindi rin A.A. at B.A.
- Ex. Bunga ng Saging 3. Measurement of change
- Change in quantity & quality brought about by bio. Trans.
Two Assets
- Biological Asset [PAS 41] Types of Bio Assets
- Agricultural Produce [PAS 41 at the point of harvest] [PAS 2 after harvest] 1. Consumable vs. Bearer Biological Assets
- Encouraged to be disclosed separately.
Examples: - Consumable
1. Sheep - Wool = Yarn or Carpet - harvested as A.P. or sold as B.A.
2. Trees - Felled Trees (Puno na pinutol) = Logs or Lumber - Hindi namumunga.
3. Pigs - Carcass (Lumang-loob) = Sausages - Yung mismong bio. asset yung ibebenta mo.
4. Dairy Cattle - Milk = Cheese - Pag namatay/hinarvest = wala na.
5. Rubber Trees - Harvested latex = Rubber products - Ex. Livestock intended for meat, fish in farms, and rice crops.
Bearer Plants: Accounted at PAS 16 = PPE - Bearer Biological Assets
a. Fruit Trees - Picked Fruit = Processed Fruit (Jam) - Other than consumable. Nagkakaroon ng agri produce nang hindi
b. Grape Vines - Picked Grapes = Wine lang isang beses.
Note: - Pag hinarvest sila, capable pa rin mag-produce.
- Bio Assets and Agri Produce = PAS 41 - Ex. Cow for milk & Banana trees which fruit is harvested.
- After Point of Harvest & Processing into Other Products = PAS 2: Inventories - Types:
a. Bearer Animal
Features of Agri. Activity - Cow, Goat
- Raising livestock (alaga ng pig, cow, chicken) - Accounted as PAS 41. Pati ang Agri. Produce
- Forestry b. Bearer Plant
 - Trees, Plants g. Agriculture-Related Activity that’s not managed such as Ocean
- Accounted as PAS 16: PPE Fishing/Deforestation
- Used for operations and long-term. - Hindi mina-manage. Non-controllable.
- Hindi lang kasi isang beses. - Hindi lang ikaw may access sa dagat.
- Pero yung Agri. Produce dito = PAS 41 pa rin.
2. Mature vs. Immature Biological Assets Recognition:
- Separate disclosure for this. a. When the entity controls the assets as a result of past event.
- Mature = attained harvestable specifications, sustain regular harvest. - Kailangan pagmamay-ari.
- Ex. Bio Asset na pwede na magharvest ng milk, fruit, meats - Ex. Legal ownership or Marking of cattle.
- Immature = hindi pa ready magharvest. b. Probable that future economic benefit will flow to the entity.
- Normally assessed by measuring significant physical attributes.
Exceptions to PAS 41 - Ex. May inahing baboy but unable to reproduce.
- Related sa agriculture, pero hindi ina-account as Bio Asset. - Ibebenta na lang.
a. Land [PAS 16, 40 & PFRS 16] c. Fair value or cost of the asset can be measured reliably.
- Land na ginagamit sa Bio Asset
- Yung land kung saan sila nakatanim. Measurement:
- Hindi naman capable to grow (bio trans) a. Biological Asset
b. Bearer Plants [PAS 16] - Initially & subsequently = FVLCTS
- Kahit na-meet yung definition sa PAS 41 - Note: At initially, FV cannot be measured reliably. Then;
- Long-term ginagamit for production sa operations - Measured at Cost - Acccu. Dep & Accu. Imp. Loss.
- Measurement: Initial Cost - Accu Dep & Accu Impairment Loss (like - Babaguhin na once malaman na yung initial recognition.
other PPE) - Yung changes, mapupunta sa P/L.
c. Government Grants Measured at Cost Less Accu Dep & Accu Imp Losses - Formula: FVLCTS
[PAS 20] Fair/Market Value
- Ex. Binigyan ng baka ng government = PAS 41 if ang measurement Less: Commissions to brokers
ay Fair Value Less Cost to Sell Less: Levies by regulators
- Otherwise PAS 20 siya. Less: Transfer taxes & duties *All non-refundable.
d. Intangible Assets [PAS 38] Fair Value Less Cost to Sell
- Ex. Forestry (permits, rights to log trees) - How to determine Fair Value?
e. Agricultural Produce after Harvest [PAS 2] - Price Active Market (Usually nabibili) => Principal (Pinakamadalas)
- Up to the point of harvest. => Most advantageous (Highest net proceeds)
- Tapos na ang harvest = Inventory - Usually = Selling/Market Price
- Magiging raw materials na. - PFRS 13
f. Animal-Related Recreational Activities such as Animals in Zoos and Parks - Yung price sa Principal Market (Sufficient ang # ng buyers
[PAS 16] and sellers) = Hindi ang FAIR VALUE, BUT CAN BE USED.
- Accounted as PPE. - Formula:
- Kahit hayop, hindi ginagamit to sell as asset. O magharvest/produce Selling Price
ng Agri Produce. Less: Transport Costs (From current location to that market)
- Natural procreation ang nangyayayri = Hindi mina-manage. Fair/Market Value of Biological Asset
Then: Deduct Costs to Sell
 b. Agricultural Produce - December 31 lang ang titingnan na date. Pero ang age magkaiba (Una at
- Initially (at the point of harvest) = FVLCTS ngayon)
- Subsequently (after point of harvest) = [PAS 2: Inventory] = LCNRV - Tumanda na.
- ALWAYS CAN BE MEASURED RELIABLY = FVLCTS - Formula:
QUANTITY X (PRICE END OF END AGE - PRICE END OF BEG AGE)
Other Considerations: + FVLCTS OF NEWBORN
1. Biological assets attached to land or
- If no separate market for the Bio Asset (Puno, Plants) Q x (PEEA - PEBA)
- Market for combined assets
- Ibabawas ang FV ng land. 2. Price Change = SADD
- Yung residual amount ang para sa Bio Asset, if given ang amount ng land. - Changes in FVLCTS not because of Bio Trans but because of price changes
2. Government Grants in the market
- If measured at FVLCTS = PAS 41 - Ex. Low supply, high demand, controlled by gov’t.
- [1] Recognized if unconditional = Sayo na yung Bio Asset - Same age (Beginning Age) Different date (end - beg) (dec-jan)
- Recorded when becomes receivable. - HINDI TUMANDA.
- Diretso Income in full. - Formula:
- [2] Recognized if conditional QUANTITY X (PRICE END OF BEG AGE - PRICE BEG OF BEG AGE)
- Ex. May restrictions for harvest in 5 years. or
- Recognized when conditions are met. Q x (PEBA - PBBA)
- Unearned Income
- [3] Conditional and allow part to be retained
- Straight-line method = annual amount Example:
- Multiply by months na nag-elapsed a. Physical Change
3. Gains & losses on Initial Recognition Beginning Quantity x New Price
- Gain if [Newborn BA or Harvest Agri Produce] = Total cash outlay<FV - FVLCTS = kung kailan pinanganak.
Agri Produce xx
Gain xx
- Loss [due to costs to sell] = Total cash outlay>FV All gains and losses: Profit or Loss presentation
Example: Market Price (10,000) - Transport Cost (500) = FV (9,500)
Purchase (10,000) Presentation:
Bio Asset 9,500 - Biological Assets = Non-current assets
Loss 500 - Agri produce = Inventories
Cash 10,000

Measurement Changes:
- Not required to disclose separately. Only changes in FVLCTS
1. Physical Change = DASD
- Due to Biological Transformation.
- Difference between prices at the end of year due to physical growth.
- FVLCTS at the beginning = IGNORED.
 Note 1:
1. Net Purchase Price = Always NET OF DISCOUNTS; REBATES or SIMILAR ITEMS
WHETHER TAKEN OR NOT.
- Binili in credit terms = tanggalin.
- Tanggalin ang discount whether nakabayad within discount period or hindi.
- Capitalized Net Purchase Price.
2. Discount Foregone = FINANCE COST (Interest Expense)
- Magkaiba binayaran sa na-capitalize.
3. Directly Attributable Costs (DACs)
- Lahat ng ginastos to purchase the asset
- To bring the asset to present location and condition.
- Note: Necessary and Unavoidable.
- If Avoidable* = Hindi capitalizable (?)
- Examples:
1. Insurance while in transit
- Ex. From USA to PH. Bumili ng insurance = Capitalizable if
in transit lang.
2. Non-refundable purchase taxes
PAS 16: Property, Plant, and Equipment - Ex. Import duties.
- Note: VAT is refundable = Not capitalized.
Criteria: Lahat ma-satisfy. - Non- refundable = Capitalizable.
1. It’s a TANGIBLE ASSET (nahahawakan, nakikita, felt) 3. Transport and handling costs
2. Expected to be useful for “MORE THAN 1 YEAR” (estimated useful life). - Ex. Pagbubuhat ng asset from one place to another.
3. Purpose: 1 of the following met = PPE (Satisfy any) - Ex. Office company to Store.
a. Production of Goods (Equipment, Machineries) 4. Installation and assembly cost
b. Delivery of Goods & Services (Automobiles, Office Equipment) - Installation cost = necessary.
c. Rental to others (NOT REAL PROPERTIES = Land & Building (Investment 5. Site preparation costs
Property) - Ex. Purchase a land. Binayad to clear the land.
d. Administrative Purposes (Building as Office Space, etc) 6. Testing costs
- Ex. Bumili ng equipment. Bago gamitin for production =
Initial Recognition Need i-test.
- Asset shall be recognized = COST - Note: Starting Jan. 1, 2023 (Revision of the Standard)
- Now, any proceeds from testing the asset/bring the
What is the cost of the asset? asset to present loc and cond SHALL NO LONGER
- General Rule: BE DEDUCTED but is REPORTED in P/L as GAIN.
Net Purchase Price - Pag binigyan ng Testing Cost na 100k. Then may proceeds
Add: DAC’s na 5k = P/L na.
Add: Present Value of Any Restoration; Dismantling Cost 7. Professional fees
Initial Cost - Ex. Architect, Engineer (Nagpagawa ng bldg)
 -[1] Purchase of Land - Fair Value Approach
- Land 1: - If may DACs:
- Land 2: 1. Attributable to specific asset = No allocation.
- Land 3: Capitalized in that specific asset.
- Humingi ng advice = May Prof. Fees as Advice 2. Attributable to several assets = allocated using FV
(300k) / 3 (choices) = 100k (Capitalized if 1 lang approach.
binili) - Ex. Professional Fees (estimation of FV) = 300k =
- Multiply by 2 if 2 biniling land. Paghahatian ng TATLO.
- Kung walang binili = No capitalizable PF - 7/15 = 140k
8. Employee benefits - 5/15 = 100k
- Ex. Wages ng trabahador na gumawa ng bldg (?) - 3/15 = 60k
- Directly attributable. - If dalawang asset lang may PF = edi divide sa 2.
Installation of Machine = 50k = Kay Machine lang.
Cost of Inefficiencies (Avoidable (?)) Capitalized to specific asset.
- Expense when incurred. If dalawang asset may IC = 7/12 and 5/12
- Ex. Nagpagawa ng 5-storey bldg.
- May fire exit kada floor. Bago magamit ang bldg = Inspect ng city inspector. Cost of PPE:
- Requirement: 5 floors = 2 fire exits kada floor = Then, hindi pwede mag- - Equipment = 466,667 + 110k = 606,667
operate. - Machineries = 333,333 + 100k + 50k = 483,333
- Additional fire exits = May cost (Necessary) but could have been avoided if - Furniture = 200k + 60k
sa plano pa lang 10 na yung fire exit.
- Sa umpisa pa lang (planning) = 10 na, hindi na gagastos ng addt’l cost. If land and building only. If may kasama (Treatment ay yung nauna)
- Example: 1. Lump-sum purchase of Land & Building (PIC 2012-02)
- City inspector assessment = Expense = Wag i-capitalize. - Hindi automatic na mag-a-allocate.
a. Determine if the building is usable. [1] May estimated useful life. [2] May FV.
9. Present Value of Any Restoration; Dismantling Cost 1. Yes - Allocate.
- Ex. Dismantle the commission. 2. No - No allocation.
- Cost x Present Value Factor (?) - NPP = Land only.
b. If usable: Allocate using FV approach (if not applicable: Residual Approach)
i. Land xx
Acquisition Method Building xx
1. By purchase = Cash xx
- General rule used. - Either land or building lang binigyan ng FV = Residual Approach.
a. Lump-sum purchase (one single price - several asset) - [1] Use the building
- Ex. Equipment + Machine + Furniture = P1M - [2] Demolish the old building. Construct new.
- 700k + 500k + 300k = P1.5M - [a] The carrying value of old bldg on the date of demolition is
- Net purchase price (P1M x n) reported in P/L as LOSS ON DISPOSAL.
- Equipment: 7/15 = 466,667 - [b] Demolition cost = site prep. cost (DACs)
- Machine: 5/15 = 333,333 - Preference of PIC: Reporting purposes. Capitalize if:
- Furniture: 3/15 = 200,000
 A. New Building = if there is a new building
constructed = capitalized as cost of the new Cash 3M
building. Unearned Income from GG 3M
B. Land = site prep cost ng land. If there’s no
construction of new bldg. Nilinis lang. Depreciation Expense 500k
Accu Dep 500k
2. By deferred payment (pay at a later date) Installment
a. Note: Available CASH PRICE = Priority = NPP UIGG 300k
b. In ABSENCE of CASH PRICE = PV of consideration given up. Income from GG 300k
i. Down payment (PV Factor 1 (?)) xx b. Gross Deduction Method
PV of Note Payable xx - The gov’t grant was deducted from your asset.
PV of installment payment xx Equipment (5M-3M) 2M
Cash price equivalent xx Cash 2M
Add: DACs and PV if any
- Do not recognize UNEARNED INCOME from GG.
3. By issuance of shares
- Ang binayad ay OSC or PSC instead cash. Depreciation Expense 200k
- Priority: 1. FV of asset received. Accu Dep 200k
2. FV of shares issued. If the FV of the shares is more reliable.
3. Par value of shares issued. - Whether FV of GD = Net expense are the same.
- Silent problem = Level of priority. - Fair Value: Asset, Liability (Unearned Income)
- Note: These are the cash price equivalent (NPP) if my DACs at PV = Add. - Gross Deduction: Tanggalin na agad kaya walang UI and Income. But the net impact
sa P/L ay parehas (FV or GD)
4. By donation
- Shareholder or outside party. 6. Exchange of Non-Monetary Asset
- FV of asset received. - Nagpalit ng equipment (same or not)
- Note: Pasok sa Share Premium (Increase) - [1] With commercial substance (configuration risk = nagbago ba position?)
- Asset xx - Ex. Company J = CV = 500k
Donated Capital or SP from donation xx - and Company K = CV = 400k
- Note: Any DACs from donation = Not capitalized. - If nagpalit ba sila, may chang eme?
- A deduction from Share Premium. - NAGKAIBA NG SITWASYON: Produce different units than usual.
Donated Capital/SP from donation xx - RECOGNIZED ASSET AT FV
Cash xx - [1] Asset received
- [2] Asset given-up
5. By government grant (PAS 20) - Often the same, since may cash settlement.
a. Fair Value Approach (Silent problem) - Whichever is clearly determinable.
- Record the asset at FV of asset where donation was made. - Kung ano lang binigay.
- Or bumili ng asset (5M) then yung 3M (Gov’t) = - If parehas given then not equal = Priority to AGU
Equipment 5M - Fair Value with Cash Settlement
Cash 5M - [1] Given-up + Cash paid = FV of asset given up
 - [2] Received - Cash received = FV of cash received - Inventories (condo, house and lot, wines (fermentation)
- ALLOWED TO RECORD GAIN/LOSS on exchange. except for manufactured for short period (choco, candies,
- Recorded value (new) xx juice)
BV of asset given-up (xx) - Manufacturing facility
Gain/Loss on Exchange xx - Power generating facilities
- Kung ikaw nagbayad = Affected ang BV (?) - Intangible asset
- [2] Lacks commercial substance - Investment property
- Same pa rin yung napo-produce. Borrowing Cost
- If may cash settlement = with commercial substance (if silent prob) 1. Specific - umutang para panggawa ng asset.
- Deemed made at FV. Palit ng asset pero dapat parehas pa rin. 2. General - umutang for construction and others
- Problem states: lacks commercial substance. 3. Mixed
- To recognize the asset at BV of the asset given-up.
- Magkano nigive-up = yun din ire-record = No difference. Note: Capitalization of BC
- BV + cash paid Start: If EBA is complete: Dapat present yung tatlo.
- Cash received. - Expenditure
- NO GAIN/LOSS ON EXCHANGE = laging equal sa BV na ginive-up. - Borrowings (outstanding during the period of construction)
- Activities (related to project, pre or during construction)
7. Self-constructed assets - Ex. Building permit fee (activities)
- Instead of buying, exchange, shares. Amount of capitalized interest:
- Tayo gagawa ng sariling asset. 1. Specific Borrowing
- Ex. Office building. - If the borrowings were made solely for construction.
- Note: Capitalized interest (cost of your asset) = Actual interest
DACs - Interest expense
1. Direct labor (Prof. fees) xx - Utang = Note/bonds payable = effective interest (if different to
2. Direct materials xx nominal)
3. Overhead xx - Actual interest
- Must be traceable. Less: investment inc from temporary investment (interest income or
dividend (equity/debt))
Capitalizable borrowing cost (PAS 23) xx Capitalized interest
Total initial cost Pxx - Each borrowings if given different SB
2. General Borrowing
- Pag umutang pampagawa = may interest = portion may be capitalized. - If for construction of the asset and other purposes.
- Automatic converted to general borrowing (if SB used for other purposes)
8. Borrowing Cost (PAS 23) - Steps:
- Qualifying assets - assets of company that takes substantial period 1. Compute for actual interest (AI).
of time to complete (matagal bago matapos) - Based on effective interest
- Ex. BIMPII (Capitalize) - Principal x Nominal x Time.wax
- Bearer Plants (PPE, plants na namumunga, produce goods 2. Compute WAAE (weighted average accumulated expenditures)
for more than 1 period, except for scrap sales, not for sale) - Kailan ginamit yung expenditures up to the end of RP or;
- Date of completion
 - WHICHEVER IS EARLIER. Interest expense = 50,000
- Ex. 1-year period (Jan 1 - Dec 31) 3. Mixed Borrowing
- 1/1/23 = 4M x 12/12 (Jan-Dec) = 4M - Same with GB.
- 4/1/23 = 5M x 9/12 = 3,750,000 - Specific and general are present.
- 8/31/23 = 6M x 4/12 = 2M
- 12/1/23 = 1.2M x 1/12 (Dec 1-Dec 31) = 100k - Specific borrowing - 4M x 8% = 320,000
- Total WAAE = 9,850,000 - General borrowing - 5M x 10% = 500,000
- Ex. Less than 1 year (?) 3M x 12% = 360,000
- Natapos = October = 10 months Total 860,000
- 1/1/23 = 4M x 10/10 (Jan-Oct) = 4M
- 4/1/23 = 5M x 7/10 = 3,500,000 1. Compute for the AI
- 8/31/23 = 6M x 2/10 = 1.2M - SB = 320,000
- Total WAAE = 8,700,000 - GB = 860,000
- Ex. More than 1 year 2. Compute WAAE
- Compute capitalized interest. - 1st year (Jan 1-Dec 31; 12 months)
3. Compute the WAR (weighted average rate) 1/1/23 2M x 12/12 2M
- Ex. Actual interest 7/1/23 3M x 6/12 1.5M
- 3M x 10% = 300,000 9/30/23 5M x 3/12 1.250M
- 5M x 12% = 600,000 12/1/23 9M x 1/12 750K
- 8M 900,000 Total WAAE 5.500M Note: For both SB & GB (Hahatiin?)
- Formula: 3. Compute WAR
Total AI 900,000 - 860,000
Total GB 8,000,000 = 11.25% 8M = 10.75%
4. Compute PI (potential interest) 4. Compute PI
- P.I. = FOR GENERAL BORROWING ONLY. - Kay General Borr ang PI
- Formula: - Total WAAE 5.500M (hahattin between sb and gb)
PI = Total WAAE x WAR - (1) Total SB (4M)
PI = 9,850,000 x 11.25% = 1,108,125 - WAAE for GB 1.5M
5. Compare the AI and PI; the capitalizable interest is whichever is - X 10.75% 10.75%
lower. 161,250 vs. 860,000
Actual Interest = 900,000 From SB (4M x 8%) 320,000
Potential interest = 1,108,125 From GB (lower) 161,250
Total capitalized int, 2023 481,250

Result: Actual Int on GB 860,000

AI<PI = AI Cap on GB (161,250)
PI<AI = PI; difference is interest expense Int Expense 698,750

Assume: AI is 900,000 and PI is 850,000

Capitalized = 850,000 As of 12/31/23:
 Total accu. Exp. = actual expenditure = 19M + Total capi. Int + 481,250 = 19,481,250
More than WAAE (construction period)

2024:
6/1/24 3M
10/1/24 2M
12/31/24 1M

Pag tumalon ng next year, yung nacompute na TACE as of 2023 = January 1 balance
WAAE: 12 months
1/1/24 19,481,250 x 12/12 = 19,481,250
6/1/24 3M x 7/12 = 1.750M
10/1/24 2M x 3/12 = 500,000
12/31/24 1M x 0/12 = 0
Total WAAE 21,731,250
Less: SB -4,000,000
WAAE for GB 17,731,250
X WAR 10.75%
P.I. 1,906,109 vs 860,000 of AI

Capitalized is 860,000 (lower)

Capitalizable interest
From SB (4M x 8%) 320,000
From GB (lower) 860,000 (no int expense since AI is cap)
Total cap int in 2024 1,180,000

Pag tinanong ang total cost = total actual expenditures

2023 = 19M
2024 = 6M
C.I. of 2023 481,250
C.I. of 2024 1,180,000
Total cost of SC Asset 26,661,250
Or direct
19,481,250 (exp + cap interest) + 6M + 1.180M = 26,661,250

2-12 for 15mins