IAS 41, IAS 16 amendments adopted for bearer plants, sugarcane, coffee, change of policy

Adecoagro S.A. – Annual report – 31 December 2016

Industry: agriculture

  1. Summary of significant accounting policies (extract)

32.1 Basis of preparation and presentation (extract)

  • Effects of the adoption of the amendments of IAS 41 and IAS 16

In June 2014, the IASB made amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture which distinguish bearer plants from other biological assets. Bearer plants are solely used to grow produce over their productive lives and are seen to be similar to an item of machinery. They will therefore now be accounted for under IAS 16. However, agricultural produce growing on bearer plants will remain within the scope of IAS 41 and continue to be measured at fair value less cost to sell. The amendments shall be applied for annual periods beginning on or after January 1, 2016, with earlier application permitted.

The Group’s sugarcane and coffee plantations qualify as bearer plants under the new definition in IAS 41. As required under IAS 8, the change in accounting policy applied retrospectively. As a consequence, the sugarcane planting and coffee plantations was reclassified to property, plant and equipment and measured at amortized cost and depreciated over their useful life on straight-line basis, effective January 1, 2016 and comparative figures retrospectively revised accordingly. The Group adopted the transitional rule which allows companies to apply fair value of bearer plants as their deemed cost as of January 1, 2014.

However, agricultural produce growing on sugarcane and coffee plantations will remain under the line biological asset and continue to be measured at fair value less cost to sell.

These amendments resulted in changes in accounting policies and adjustments to the amounts and the results of the operations recognized in the financial statements as of and for the years ended December 31, 2016 and 2015, as follows:

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