Amendments of IAS 16 and IAS 41 and the main changes on Agriculture: Bearer Plants

1272 Words Sep 18th, 2014 6 Pages
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Word counts: 1103 (excluding reference and appendices) Table of Contents
Part A: Introduction Part B: Amendments of IAS 16 and IAS 41 and the main changes on Agriculture: Bearer Plants.
Part C: Advantages and Disadvantages from the Amendments.
Part D: Treasury Wine Estate and the impact of the Exposure Draft.
Part E: Conclusion.
Part F: Reference List.

Part A: Introduction
IRFS published the Exposure Draft 2013/8 Agriculture: Bearer Plants about the amendments of IAS 16 and IAS 41. The Exposure Draft has changed the definition and accounting standards of Bearer Plants. This report will focus on outline the main changes, the advantages & disadvantage and the impact
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IRFS Foundation, (2013, p.22 ED) notes that entities will use accumulate cost for bearer plant before they reach the stage of maturity or which means that bearer plants are not in the location for plant and not having the ability to bear products. The reason because the fair value method of IAS 41 is not useful to measure the bearer plants at the early years before transformation (IRFS 2013, p.22 ED).
During the production stage, IAS 16 states the bearer can be accounted under the cost method or revaluation method. The adoption of the method depends on entities policies and judgements. Part C: Advantages and Disadvantages from the Amendments.
Advantages
The Expose Draft has redefined and changed the accounting treatments of Bearer Plants to be more accurate. The first reason is because the Bearer Plants usually sold for scraps after life cycle so these assets have no real markets. According to IRFS Foundation, (2013, p.17, ED) notes that the use of fair value method for Bearer Plants is complex and hard to evaluate as most Bearer Plants rarely have an active market to estimate. Moreover, the change in fair value of Bearer Plant is recorded in profit or loss account. Nevertheless, most users of the financial reports often eliminate the fair value change in profit or loss account as it is lack or relevance due to absence of market and information (IRFS

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