Sample Disclosure – Accounting Policy Of Biological Assets (22 November 2009)
All expenses incurred in land preparation, planting and development of crops up to maturity are capitalised as biological assets; all expenses subsequent to maturity are recognised directly in income statement.
Biological assets are stated at revalued amount, which is the fair value at date of revaluation less any accumulated impairment losses. Fair value is determined by market-based evidence by appraisal that is carried out by professionally qualified valuers. Revaluation of biological assets are carried out at sufficient regularity and any material differences are adjusted accordingly to ensure that the carrying value of the assets does not differ materially from the fair values determined as at balance sheet date.
Any revaluation surplus is credited to the revaluation reserve account, except that if the surplus reverses the previously recognised revaluation decrease in income statement of the same asset, such surplus would be recognised in income statement until it completely reverses the previously recognised revaluation decrease before any excess amount of surplus is recognised in the revaluation reserve account within equity. Such revaluation reserve account is classified as part of non-distributable reserves within equity section of the Company.
A revaluation decrease is first recorded as a set-off against the amount of previously recognised revaluation surplus in equity of the same asset and any balance of revaluation decrease thereafter are recognised in income statement.
Upon disposal or retirement of biological assets, the differences between the disposal proceeds and the carrying value of such biological assets are recognised as gains or losses in income statement accordingly. Any balance of revaluation reserve account for such assets are then transferred to retained earnings and thereafter is available for distribution to the equity holders of the Company.