1 International Financial Reporting Standards IFRS for SMEs IFRS Foundation-World Bank 18–20 October 2011 Sarajevo, Bosnia and Herzegovina Copyright © 2010 IFRS Foundation. All rights reserved.

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 2 The IFRS for SMEs Topic 4.5 Section 34 Specialised Activities Michael Wells

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 3 Section 34 – Overview Section 34 provides guidance on financial reporting by SMEs involved in three types of specialised activities: 1.Agriculture 2.Extractive activities 3.Service concession arrangements These slides cover Agriculture only

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 4 Section 34 – Agriculture Agricultural activity is the management by an entity of the biological transformation of biological assets for sale, into agricultural produce or into additional biological assets. A biological asset is a living plant or animal. Agricultural produce is the harvested product of an entity’s biological assets

© 2011 IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK | Sections 34 – scope examples In scope of S34? Ex 3*: A produces wine from grapes harvested from its vineyards in a 3-year production cycle Ex 7**: B owns –a herd of cattle—breeding stock of its agricultural activities –a tractor to transport feed to the herd * see example 3 in Module 13 of the IFRS Foundation training material ** see example 7 in Module 17 of the IFRS Foundation training material 5

© 2011 IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK | Section 34 – examples continued In scope of S34? Ex 3: C breeds dogs for sale in the pet trade. Ex 4: D buys dogs to race them in dog races (rather than for breeding purposes). Ex 5: E operates a bird breeding zoo. Ex 6: F purchases a tract of land adjacent to an unfenced national safari park to operate its ecotourism photographic safaris on. Wild animals roam freely between the national park and the land owned by F. 6

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 7 Section 34 – Agriculture An entity that is engaged in agricultural activity shall measure each class of its biological assets: –at fair value (for those biological assets for which fair value is readily determinable without undue cost or effort) –at cost (for all other biological assets)

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 8 Section 34 – Agriculture – fair value model An entity shall measure a biological asset at its fair value less cost to sell: –on initial recognition –at each reporting date Changes in fair value less cost to sell are recognised in profit or loss.

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 9 Section 34 – Agriculture – fair value model Example At 31/12/20X1, an entity’s plantation consists of 100 Pine trees that were planted 10 years earlier. A pine tree takes 30 years to mature. –fair value less cost to sell at 31/12/20X0 = CU100 –fair value less cost to sell at 31/12/20X1 = CU105 At 31/12/20X1 the entity will recognise CU5 income in profit or loss (ie CU105 less CU100).

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Section 34 – Agriculture – fair value model Agricultural produce harvested from biological assets is measured at its fair value less cost to sell at the point of harvest. This measurement is the cost at that date when applying Section 13 Inventories (or another section of the IFRS for SMEs).

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Section 34 – Agriculture – fair value model In determining fair value, an entity considers: The quoted price in an active market (if one exists) If no active market, considers: 1)the most recent market transaction price 2)market prices for similar assets 3)sector benchmarks (eg value of cattle expressed per kilogram of meat)

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Section 34 – Agriculture – fair value model Disclosures –description of each class of biological assets –methods and significant assumptions applied in determining the fair value –reconciliation of changes in the carrying amount of biological assets between the beginning and the end of the current period.

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Section 34 – Agriculture – cost model The entity measures at cost less any accumulated depreciation and any accumulated impairment losses those biological assets whose fair value is not readily determinable without undue cost or effort.

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Section 34 – Agriculture – cost model Disclosures –description of each class of biological assets –explanation of why fair value cannot be measured reliably –depreciation method used –useful lives or depreciation rates used –gross carrying amount and the accumulated depreciation at the beginning and end of the period.

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Questions or comments? Expressions of individual views by members of the IASB and its staff are encouraged. The views expressed in this presentation are those of the presenter. Official positions of the IASB on accounting matters are determined only after extensive due process and deliberation.

© 2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK This presentation may be modified from time to time. The latest version may be downloaded from: the+trainer+workshops.htm The accounting requirements applicable to small and medium ‑ sized entities (SMEs) are set out in the International Financial Reporting Standard (IFRS) for SMEs, which was issued by the IASB in July The IFRS Foundation, the authors, the presenters and the publishers do not accept responsibility for loss caused to any person who acts or refrains from acting in reliance on the material in this PowerPoint presentation, whether such loss is caused by negligence or otherwise.