IRFS published the Exposure Draft 2013/8 Agribusiness: Carrier Plants about the amendments of IAS 16 and IAS 41. The Exposure Draft has changed the definition and accounting criterions of Bearer Plants. This study will concentrate on lineation the chief alterations. the advantages & A ; disadvantage and the impact on Treasury Win Estate Ltd. Part B: Amendments of IAS 16 and IAS 41 and the chief alterations on Agribusiness: Carrier Plants. The Bearer Plant definition

The amendment of IAS 16 has changed the definition of biological assets to the category of Property. works. equipment that is usage in an entity’s operation. IRFS Foundation. ( 2013. p. 12 ED ) in IAS 41 analyses Bearer Plant is works that used in agribusiness procedure. could bring forth at least for one period could non be sold except for bit gross revenues. The definition for Bearer Plant is now altering from “livestock” to be more “properties” significance. IAS 41 besides adds Agriculture that related to bearer biological assets or besides understands as “held merely to bear produce” such as grape vines. shrubs are accountable in IAS 16 as PPE.

On the other manus. IAS 41 biological assets which are farm animal that could be consumable such as fish. hogs are considered to be Agriculture Activity. Furthermore. IRFS Foundation. ( 2013. p. 8 ED ) high spots that Biological transmutation ( IAS 41 ) is defined as the procedure to growing. production and crop that make the alteration in the quality and measure of the assets. However. when sing the definition of Bearer Plant into Biological assets. it is non similar. The operation Bearer Plant is considered to be the “process of manufacturing” . Application of IAS 16 to Bearer Plants

As Bearer Plant is removed from IAS 41 to accommodate IAS 16. the just value method is no longer used. IRFS Foundation. ( 2013. p. 22 ED ) notes that entities will utilize accumulate cost for carrier works before they reach the phase of adulthood or which means that carrier workss are non in the location for works and non holding the ability to bear merchandises. The ground because the just value method of IAS 41 is non utile to mensurate the carrier workss at the early old ages before transmutation ( IRFS 2013. p. 22 ED ) . During the production phase. IAS 16 states the carrier can be accounted under the cost method or reappraisal method. The acceptance of the method depends on entities policies and opinions. Part C: Advantages and Disadvantages from the Amendments.

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The Expose Draft has redefined and changed the accounting interventions of Bearer Plants to be more accurate. The first ground is because the Bearer Plants normally sold for garbages after life rhythm so these assets have no existent markets. Harmonizing to IRFS Foundation. ( 2013. p. 17. Erectile dysfunction ) notes that the usage of just value method for Bearer Plants is complex and difficult to measure as most Bearer Plants seldom have an active market to gauge. Furthermore. the alteration in just value of Bearer Plant is recorded in net income or loss history. However. most users of the fiscal studies frequently eliminate the just value alteration in net income or loss history as it is lack or relevancy due to absence of market and information ( IRFS Foundation. 2013. p. 17. ED ) . Therefore. the Bearer Plant should be scope out from the Biological Assets Disadvantages

The Expose Draft is limited to cover some footings of Bearer Plant. IRFS Foundation. ( 2013. p. 5 ED ) wrote a instance that a Bear Plant is growing to bear merchandises and besides could be sold as life workss such as timber. which is individually from scrap sale. The Expose Draft accounts the bear works in this instance to be in the scope of IAS 41. However. IAS 16 and IAS 41 of the Expose Draft do non cover any instance from this. Ghani. et. Al ( 2013. p. 1 ) explain that in such instance. the Expose Draft should specify a new term “Consumable carrier biological assets” . The definition would back up users and entities to be more accurate and non baffled users in doing determination. Another disadvantage is the Expose Draft defined the Bear Plant before the phase of mature is “self-constructed” in IAS 16. paragraph 22A. The ground is the difference between the nature of carrier works and other assets.

First. the machine could be fixed and upgradeable in their life rhythm while the bearer life may take more than 20 old ages in the turning phase and production phase ( Ghani. et. al 2013. p. 2 ) . Therefore. it is inappropriate to defined immature Bearer Plant as “self-constructed” because of uncertainness from the nature. Finally. it is hard to utilize the depreciation method for Bearer Plant. EFRAG ( 2013. p. 8 ) examines that bearer works productiveness base on the life rhythm as it increase when it turn and diminish as it life reached. Therefore. the depreciate method of utile life or consecutive line method could be hard to use. Part D: Treasury Wine Estate and the impact of the Exposure Draft. Treasury Wine Estate has 10. 511 hectares of grape vine among Australia ( Treasury Wine Estate. p. 98 ) .

As the amendment of IAS 16 and 41. Treasury Wine Estate has to alter the footing criterion to account for carrier workss ( grape vines and olives trees ) . Therefore. carrier works will be included in PPE history of non-current plus. First. for the immature carrier works. it will be classified as “in construction” . the entity need to enter a new history for accumulated the cost. This history will deprecate straight to PPE history in the non-current assets of the statement of fiscal place. Nevertheless. the disbursal such as fertilise. H2O used for growing will be recorded in disbursal history in statement of comprehensive income. With this alteration. non- current plus will be addition and company need to roll up depreciate for bear workss.

For mature vines and grapes. the entity will necessitate to extinguish the just value theoretical account of IAS 41 to accommodate IAS 16. Treasury Wine could take between the reappraisal theoretical accounts or cost theoretical account. If Treasury Wine Estate chose the cost theoretical account. the carrier workss account will be recorded base on the cost less accrued depreciation and damage. The application of this method would be simple and cheap but it is non accurate comparison to revaluation theoretical account. IASB Agenda ( p. 4. 2014 ) states that Revaluation theoretical account will guarantee the transporting sum of assets non to be different from just value at the coverage day of the month. In add-on. it is possible to use reappraisal theoretical account as there would be adequate relevancy information. However. the just value of merchandises ( grapes ) and full works are individually. comptrollers need to detect because there is no such market for an full works except dirt market. Part E: Decision

The adaptation of Exposure Draft is necessary as it better the quality of information in fiscal measuring. However. as it is the first clip acceptance. it still have some hard to use. Treasury Wine Ltd will necessitate to research and train in order to accommodate the new criterions.

Part F: Mention List.
European Financial Reporting Advisory Group 2013. Feedback statement on ED/2013/8 Bearer Plants. viewed May 12. . Ghani. E & A ; Muhammad. K 2013. Comment ON EXPOSURE DRAFT: Agribusiness: Carrier PLANTS ( PROPOSED AMENDMENTS TO IAS 16 AND IAS 41 ) . viewed May 13 2014. IFRS database. International Financial Reporting Standards 2013. Agribusiness: Carrier Plants Proposed amendments to IAS 16 and IAS 41. IBSN 978-1-907877-83-4. IFRS Foundation Publication Department. London. International Financial Reporting Standard 2013.

Staying issues raised by respondents to the Exposure Draft. No. 13A. IFRS Foundation Publication Department Treasury Wine Estate 2013. Annual Report 2013. TWE. Victoria.


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