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The importance of biological asset disclosures to the relevant user groups

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  • Biljon, Marilene van
  • Scott, Deon

Abstract

Financial statements are prepared and presented to reflect an organisation’s financial position and financial performance and to provide useful information for decision-making (IASB, 2018a). The underlying accounting policies and related notes on biological assets must be presented in such a way that users can understand the transactions and valuation considerations that affect their performance (IASB, 2018a). Financial statement valuations and disclosures are informed by the requirements of the prescribed International Accounting Standards, which presumes that users “have a reasonable knowledge of business and economic activities and accounting and have a willingness to study the information with reasonable diligence” (IASB, 2018a). The accounting standards thus urges reporters to consider the usefulness of the information disclosed in the financial statements, as it may influence the decisions of users (IASB, 2018a). In systematically documenting the decision-enhancing disclosure for biological assets as required by users, the reporters have a comprehensive guideline to ensure that the disclosure is objective and a more accurate presentation of the real value. A consideration of the expectations of reporters may also address the general biological asset valuation challenges experienced in the industry. The detailed disclosures might attract investments, enhance market comparability and assist the users of the related financial information to understand the performance of biological assets.

Suggested Citation

  • Biljon, Marilene van & Scott, Deon, 2019. "The importance of biological asset disclosures to the relevant user groups," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 58(2), March.
    • Handle: RePEc:ags:agreko:347869
    DOI: 10.22004/ag.econ.347869
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    References listed on IDEAS

    as
    1. Rute Gonçalves & Patrícia Lopes, 2014. "Accounting in Agriculture: Disclosure practices of listed firms," FEP Working Papers 530, Universidade do Porto, Faculdade de Economia do Porto.
    2. Hana BOHUŠOVÁ & Patrik SVOBODA & Danuše NERUDOVÁ, 2012. "Biological assets reporting: Is the increase in value caused by the biological transformation revenue?," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(11), pages 520-532.
    3. Neculina CHEBAC & Cristina Mihaela ONICA, 2009. "Correlation Between International Financial Reporting Standards And Assessment In The Context Of Market Value Relations -Fair Value," EuroEconomica, Danubius University of Galati, issue 2(23), pages 32-49, december.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Agribusiness; Agricultural Finance;

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