IAS 41 agriculture and biological assets

A calf grows into a steer, grapes ripen on the vine, salmon put on weight: in agriculture, value is created by biological change rather than by a production line, and historical cost says little about it. IAS 41 answers with fair value. This guide explains what IAS 41 covers, how biological assets and produce are measured, works through a cattle feedlot's year, and covers bearer plants, subsequent costs, grants, disclosures and how US GAAP differs.

By Mirza Fahad Baig, Chartered Accountant. Reviewed by Hamza Fida, Chartered Accountant. 4 minute read.

Short answer

IAS 41 Agriculture covers biological assets, which are living animals and plants such as cattle, fish, crops and timber, agricultural produce at the point of harvest, such as milk, grapes and felled logs, and government grants related to biological assets. Biological assets are measured at fair value less costs to sell when first recognised and at every reporting date, and the gains and losses, including those arising on initial recognition, such as the birth of a calf, go to profit or loss. Fair value is measured under IFRS 13, and costs to sell are the incremental costs of disposal, such as auction commissions, but not transport. Agricultural produce is measured at fair value less costs to sell at harvest, which becomes its cost under IAS 2 from then on. Bearer plants, such as tea bushes, vines and oil palms, are accounted for as property, plant and equipment under IAS 16, although the produce growing on them stays within IAS 41. If fair value cannot be measured reliably when an asset is first recognised, it is carried at cost less depreciation and impairment until it can. In this guide's example, cattle bought for CU 800,000 show a day-one loss of CU 16,000 and a year-end gain of CU 147,000.

At a glance

Covers
Animals and plants
Measure at
Fair value less costs
Changes go to
Profit or loss
At harvest
Produce into inventory
Bearer plants
IAS 16, not IAS 41
US GAAP
Mostly historical cost
IAS 41 agriculture and biological assetsCovers: Animals and plants; Measure at: Fair value less costs; Changes go to: Profit or loss; At harvest: Produce into inventory; Bearer plants: IAS 16, not IAS 41; US GAAP: Mostly historical cost.KEY FACTS AT A GLANCEIAS 41 agriculture and biological assetsCoversAnimals and plantsMeasure atFair value less costsChanges go toProfit or lossAt harvestProduce into inventoryBearer plantsIAS 16, not IAS 41US GAAPMostly historical costTax BakersIAS 41 agriculture and biological assetsCovers: Animals and plants; Measure at: Fair value less costs; Changes go to: Profit or loss; At harvest: Produce into inventory; Bearer plants: IAS 16, not IAS 41; US GAAP: Mostly historical cost.KEY FACTS AT A GLANCEIAS 41 agriculture and biologicalassetsCoversAnimals and plantsMeasure atFair value less costsChanges go toProfit or lossAt harvestProduce into inventoryBearer plantsIAS 16, not IAS 41US GAAPMostly historical costTax Bakers
Key facts at a glance, as set out in this guide.

What does IAS 41 cover?

Biological assets, agricultural produce at the point of harvest, and government grants related to biological assets measured at fair value less costs to sell. It does not cover agricultural land, which falls under IAS 16 or IAS 40; bearer plants, which fall under IAS 16; intangible assets such as production quotas; or produce after harvest, which is inventory under IAS 2. A bearer plant is a living plant used to produce agricultural produce, expected to bear produce for more than one period, and with only a remote chance of being sold as produce itself, such as a vine or an oil palm. See IAS 16 property, plant and equipment.

How are biological assets measured?

At fair value less costs to sell, on initial recognition and at the end of each reporting period. Fair value follows IFRS 13: quoted prices in an active market for the asset in its present location and condition where available, otherwise a valuation technique such as discounted cash flows. Transport costs to market are reflected in fair value, so they are not also deducted as costs to sell. Gains and losses go to profit or loss in the period they arise. See IFRS 13 fair value and biological assets at fair value.

What happens at harvest?

From biological asset to saleFrom biological asset to sale1BiologicalassetFair value lesscosts to sell2Growth andprice changesGains and lossesin profit or loss3HarvestProduce at fair valueless costs to sell4After harvestInventory underIAS 2, then sale
Fair value less costs to sell applies until harvest; IAS 2 takes over after.

Produce harvested from biological assets is measured at fair value less costs to sell at the point of harvest, with the gain or loss in profit or loss, and that amount becomes its cost for IAS 2. Processing after harvest, such as turning grapes into wine, is outside IAS 41. The sale is then revenue under IFRS 15. See IAS 2 inventories.

IAS 41 in practice: a cattle feedlot's year

On 1 April a feedlot buys 1,000 cattle at auction for CU 800 each, CU 800,000 in total. Selling costs, mainly auction commission, are 2% of value. By 31 December the cattle have gained weight and their market price is CU 950 a head. Feed and veterinary costs of CU 90,000 are expensed as incurred under its accounting policy.

CU
Purchase price800,000
Fair value less costs to sell at purchase: 800,000 x 98%784,000
Loss on initial recognition(16,000)
Fair value less costs to sell at 31 December: 1,000 x 950 x 98%931,000
Gain from growth and price change147,000
Feed and veterinary costs expensed(90,000)
Net effect on profit before tax41,000

Buying at auction creates a small day-one loss, because fair value less costs to sell is below the price paid. The year-end gain captures both the weight the cattle put on and the price movement; many companies show the two separately.

Are later costs capitalised or expensed?

IAS 41 does not say. In an agenda decision first published in 2019 and updated in January 2026 for IFRS 18, the IFRS Interpretations Committee concluded that a company chooses a policy, applied consistently to each group of biological assets, either to add subsequent expenditure such as feed to the asset's carrying amount or to expense it as incurred. The choice has no effect on fair value or on profit, because the asset is remeasured to fair value anyway; it changes only how amounts are presented.

How are grants on biological assets treated?

An unconditional grant related to a biological asset measured at fair value less costs to sell is recognised in profit or loss when it becomes receivable. A conditional grant is recognised when the conditions are met, or progressively if the terms allow part of it to be kept as time passes. Grants on assets carried at cost, including bearer plants, follow IAS 20. See government grants in agriculture and IAS 20 government grants.

How does US GAAP treat agriculture?

ASC 905 generally measures growing crops and animals at historical cost, accumulating the costs of production, with write-downs where needed, rather than at fair value. US GAAP also has no bearer plant concept. Results under the two frameworks can therefore differ markedly in timing. See IFRS vs US GAAP key differences.

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Questions people ask

What is a biological asset?

A living animal or plant, such as cattle, fish, crops or timber, other than a bearer plant.

How are biological assets measured under IAS 41?

At fair value less costs to sell at initial recognition and at each reporting date, with changes in profit or loss.

Are bearer plants covered by IAS 41?

No. Bearer plants, such as vines and oil palms, are property, plant and equipment under IAS 16, but the produce growing on them stays within IAS 41.

How is agricultural produce measured at harvest?

At fair value less costs to sell at the point of harvest, which then becomes its cost under IAS 2.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IFRS Foundation: IAS 41 Agriculture
  2. IFRS Interpretations Committee: Subsequent Expenditure on Biological Assets (IAS 41), agenda decision, updated January 2026

Rules and fees change. If you are reading this long after October 21, 2026, confirm the figures with the source before you rely on them.

AgricultureBiological assets at fair valueAgricultureGrants for agricultureIFRS 13IFRS 13 fair value measurement and the fair value hierarchy

More in IAS 41

TopicThe IAS 41 topic page

This guide is general information. It is not tax or legal advice for your situation.