The Influence of Fair Value versus Historic Cost Valuation for Biological Assets in Earning: The Case of A Listed Company

• Main Authors: Lee Su-Hua, 李素華
• Other Authors: 詹乾隆
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/2tmf63

碩士 === 東吳大學 === 會計學系 === 101 === All listed companies in Taiwan have to adopt International Accounting Financial Reporting Standards (IFRS) commencing from Jan 1st, 2013. For companies which selling agriculture products need to change their accounting principle from ROC GAAP to IFRS. Under present ROC GAAP, there is no specific accounting standard which can provide accounting treatment for agriculture industry, however the International Accounting Standard #41(IAS41) refers the special treatment for these companies. The standard requires biological assets measure the value at fair value less costs to sell from initial recognition and transferred process up to the point of harvest, it requires that the change in fair value less costs to sell of a biological assets be included in profit or loss for the period in which it arises. The nature of farming makes the measurement of fair value inherently difficult and complex for these companies which have biological assets because the fair value is affected by procreation, growth, degeneration and death. This case study is to discuss on market price, estimates of the physical quantities and rationality of historical-based cost in the samples of biological assets from the subject company provided data. Finally the study analyses the influence of fair value versus historic cost valuation for biological assets in earning. The study concludes: 1. This research finds significant differences in earnings for firm using fair value or historic cost for biological assets when the production cycle is different. 2. This research finds significant differences in earnings for firm using fair value or historic cost for biological assets when the market price changes volatility or stable. 3. There are significant differences in earnings for firm choosing from different method when the fair value measurement for biological assets. 4. The preference of fair value over historic cost on the market price to provide appropriate and timely valuation for biological assets. 5. Most of consumable biosocial assets in Taiwan have active market and can be valued by market price when they reach the point of harvest. 6. This research shows the historical cost will be the best valuation method if the lack of active market for biological assets.