Background
On the 25thof June 2014 the International Accounting Standards Board (IASB) published amendments that change the financial reporting for bearer plants, such as grape vines, rubber trees and palm oil.
These amendments were made to IAS 16Property, Plant and Equipmentand IAS 41Agriculture.
Required
First, choose ONE of the following companies: Australian Vintage Ltd, Boundary Bend Ltd, or Treasury Wines Ltd, to illustrate your answers below. Use the company’s 2014 Annual Report/Financial Report.
You are a recent graduate working for a Big 4 accounting firm and your manager has asked you to prepare a report which is to be presented to the Chief Financial Officer (CFO) of your selected company. The report should:
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a) Outline the main changes to the recognition and measurement of bearer plants contained in the amendments to IAS 16Property, Plant and Equipmentand IAS 41Agriculture;
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b) Explain why the IASB has made these amendments, including a discussion of the advantages and disadvantages of fair value measurement (in this context); and
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c) Advise the CFO on the possible impact of these amendments for the company in relation to any agricultural assets the company may have. Be as specific as possible, and reference the company’s annual report where necessary.