In response to constituent feedback that the fair value model is not appropriate for measuring bearer plants – e.g. grapevines or palm trees bearing fruit – the IASB has issued an exposure draft Agriculture: Bearer Plants.
Under the proposal, an entity could elect to measure bearer plants at cost. However, the produce growing on bearer plants would continue to be measured at fair value less costs to sell under the standard on agriculture (IAS 41).
The proposal would simplify the measurement of bearer plants and will be welcomed by many companies and investors – particularly in Asia – who consider the current fair value accounting for bearer plants as being subject to too much uncertainty.
Comments are due to the IASB by 28 October 2013. Read our In the Headlines to understand what the proposal means for your business.