Measurement of Fair Value of Biological Assets: Study on the Lithuanian Farms

Puslapiai nurodyti pagal pataisytą leidinįAnalysis of scientific literature and practice of accounting has suggested that there is no general consensus among the researchers and the practitioners on the value measurement method to apply to the biological assets raised and used for production of agricultural produce at the agricultural enterprises. Both the researchers and the practitioners have noted advantages and shortcomings of the cost and fair value less estimated costs to sell. In view of the background analysis conducted, the practitioners are believed to be more inclined to opt for the cost method in order to measure value of the biological assets, while the international accounting regulations (IAS 41) and national regulations in certain countries (the Czech Republic, South African Republic, Turkey, etc.) provide for only the fair value less estimated costs to sell method for measurement of value of the biological assets. The relevance of this research for Lithuania is also supported by the fact that the accounting regulation for biological assets (BAS 17) of our country provides for the option to use one of the methods mentioned above for measurement of value of biological assets. As part of the research presented, advantages of the fair value less estimated costs to sell method for measurement of value of the biological assets have been explored, changes in the value of the assets have been compared upon replacement of the cost method of value measurement with the fair value less estimated cost to cell method; the effect of replacement of the value measurement method on financial statements of the enterprises analysed and key relative financial indicators has been analysed. Analytical data and information on the biological assets provided in the financial statements of three agricultural enterprises have been used for the study. The choice of enterprises has been based on the intention to include farms of different specializations into the study.[...]Vytauto Didžiojo universitetasŽemės ūkio akademij