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Contents
34.2 Agriculture – recognition and measurement.
34.2.1 Extract from FRS102: Section 34.2-.34.3B.
34.2.2.1 The meaning of biological assets and examples.
34.2.2.1.1 Agricultural activity defined.
34.2.2.1.1.1 Requirements for biological transformation.
34.2.2.1.1.2 Requirements for biological transformation to be managed.
34.2.2.1.2 Biological asset defined.
34.2.2.2 Recognition criteria.
34.2.2.3 Accounting for agricultural produce within the scope of Section 34.
34.2.2.4 Items excluded from the definition of agriculture.
34.2.2.5 Accounting policy choices:
34.2.2.5.3 Accounting policy choice by class.
34.2.2.6 Accounting for agricultural produce after point of harvest.
34.3 Measurement – fair value model.
34.3.1 Extract from FRS102: Section 34.4-.34.6A.
34.3.2.1 Initial and subsequent recognition.
34.3.2.2. Fair value hierarchy model.
34.3.2.2.1 Active market defined.
34.3.2.2.1.1. What market to use where there is more than one market and markets in other locations.
34.3.2.2.1.1.1 More than one market to sell the produce.
34.3.2.2.1.1.2 Market in different locations.
34.3.2.2.1.1.3 Use of cash flow model to determine fair value.
34.3.2.3 Application of the fair value model.
34.3.2.4 Fair values cannot be reliably measured.
34.5 Disclosures – fair value model.
34.5.1 Extract from FRS102: Section 34.7-34.7B.
34.5.2.2.1 Extract from accounting policies note for forestry.
34.5.2.2.2 Extract from accounting policies note for livestock (Extracted from Appendix to IAS 41).
34.5.2.3 Critical accounting estimates and judgments disclosure.
34.5.2.4 Notes to financial statements.
34.7 Measurement – cost model.
34.7.1 Extract from FRS102: Section 34.8-34.9.
34.7.2.1 Initial and subsequent measurement/
34.7.2.2 Choices when applying the cost model to agricultural produce.
34.8 Disclosures – cost model.
34.8.1 Extract from FRS102: Section 34.10-34.9.
34.8.2.3 Notes to the financial statements.
34.9.1 Extract from FRS102: Section 34.11-.34.11C.
34.10 Service Concession Arrangements.
34.10.1 Extract from FRS102: Section 34.12-.34.16A.
34.10.2.2 Service conditions arrangements defined.
34.10.2.2.1 Conditions that must apply.
34.11.1 Extract from FRS102: Section 34.17-.34.33.
34.11.2.2 Financial institution defined.
34.12 Retirement Benefit Plans: Financial Statements.
34.12.1 Extract from FRS102: Section 34.34-.34.48.
34.12.2.2 Full set of financial statements.
34.13.1 Extract from FRS102: Section 34.49-.34.56.
34.13.2.1 Heritage asset – defined.
34.13.2.2 Recognition and measurement.
34.13.2.3 What about old heritage assets where there are no records to determine cost.
34.13.2.4 Where should heritage assets be disclosed on the balance sheet.
34.13.2.5.1 Possible reasons for impairment.
34.13.2.6 Useful life and residual value.
34.13.2.7 Heritage assets received free of charge.
34.13.2.8.2 Illustration of some of the disclosure requirements for heritage assets.
34.14.1 Extract from FRS102: Section 34.57-.34.63 and Appendix A to Section 34.
34.15 Public benefit entities: Incoming Resources from Non-Exchange Transactions.
34.15.1 Extract from FRS102: Section PBE34.64-.PBE34.74 and Appendix B to Section 34.
34.15.2.1 Public benefit entity defined.
34.15.2.1.1 Requirement to disclose that an entity is a public benefit entity.
34.15.2.2 Special rules for public benefit entities.
34.15.2.2.1 Assets held for provision of social benefits.
34.15.2.2.2 Income resources from non-exchange transactions.
34.15.2.2.2.2 Accounting for non-exchange accounting.
34.15.2.2.2.2.1 Recognition for goods and measurement for goods.
34.15.2.2.2.2.1.1 Performance related conditions defined.
34.15.2.2.2.2.1.2 Conditions that are not performance related.
34.15.2.2.2.2.1.3 Examples of non-exchange resource transactions received in the form of goods.
34.15.2.2.2.2.2 Non-exchange resources received in the form of services/facilities.
34.15.2.2.2.2.2.2 Recognition and measurement.
34.15.2.2.2.2.2.2.1 Examples of non-exchange Transactions where services/facilities provided.
34.15.2.2.3 Public benefit entity combinations.
34.15.2.2.3.1.1 Business combinations defined.
34.15.2.2.3.2 Accounting Requirements.
34.15.2.2.3.2.1 Gift of a business for nil or nominal consideration.
34.15.2.2.3.2.1.1 Example of business combinations which is a gift that is not a merger.
34.15.2.2.3.2.1.2 Disclosures.
34.15.2.2.3.2.2 Examples illustrating merger accounting.
34.15.2.2.3.2.3 Meets the definition of a true acquisition and the purchase method applies.
34.15.2.2.3.2.3.1 Example business combination: Not a merger or gift – Purchase accounting method.
34.15.2.2.4 Public benefit concessionary loans.
34.15.2.2.4.2 Public benefit entity loan defined.
34.15.2.2.4.3 Accounting treatment of public benefit concessionary loans choices. 4
34.15.2.2.4.5 Examples of concessionary loans.
34.15.2.2.5 Government grants and accounting requirements.
34.15.2.2.5.1.1 Grants of all natures – Performance model.
34.15.2.2.5.1.2 Accrual model FRS 102 only.
34.15.2.2.5.2 Example of government grant accounting of PBE’S.
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The below extracts and guidance is applicable for periods beginning before 1 January 2019 and are based on the September 2015 version of FRS 102. For periods beginning on or after 1 January 2019, the March 2018 version of FRS 102 applies which incorporates the changes made by the Triennial review of FRS 102. Note the March 2018 version of FRS 102 can be voluntarily applies for periods beginning before 1 January 2019. For the extracts from the March 2018 version of FRS 102 and the related guidance please click on the following link. For details of a summary of the main changes as a result of the triennial review please see the following link.
34.13 Heritage Assets
34.13.1 Extract from FRS102: Section 34.49-.34.56
34.49 All heritage assets shall be accounted for in accordance with the requirements of paragraphs 34.50 to 34.56. These paragraphs do not apply to investment property, property, plant and equipment or intangible assets which fall within the scope of Section 16 Investment Properties, Section 17 Property, Plant and Equipment and Section 18 Intangible Assets other than Goodwill.
34.50 Works of art and similar objects are sometimes held by commercial entities but are not heritage assets because they are not maintained principally for their contribution to knowledge and culture. These assets shall therefore be accounted for in accordance with Section 17. Heritage assets used by the entity itself, for example historic buildings used for teaching by education establishments, shall also be accounted for in accordance with Section 17. This is based on the view that an operational perspective is likely to be most relevant for most users of financial statements. However, entities that use historic buildings and similar assets may wish to consider whether it is appropriate to apply the disclosures required by paragraphs 34.55 and 34.56.
Recognition and measurement
34.51 An entity shall recognise and measure heritage assets in accordance with Section 17 (i.e. using the cost model or revaluation model), subject to the requirements set out in paragraphs 34.52 to 34.53 below.
34.52 Heritage assets shall be recognised in the statement of financial position separately from other assets.
34.53 Where heritage assets have previously been capitalised or are recently purchased, information on the cost or value of the asset will be available. Where this information is not available, and cannot be obtained at a cost which is commensurate with the benefits to users of the financial statements, the assets shall not be recognised in the statement of financial position, but must be disclosed in accordance with the requirements below.
34.54 At each reporting date, an entity shall apply Section 27 Impairment of Assets to determine whether a heritage asset is impaired and, if so, how to recognise and measure the impairment loss. A heritage asset may be impaired, for example where it has suffered physical deterioration, breakage or doubts arise as to its authenticity.
Disclosure
34.55 An entity shall disclose the following for all heritage assets it holds:
(a) An indication of the nature and scale of heritage assets held by the entity.
(b) The policy for the acquisition, preservation, management and disposal of heritage assets (including a description of the records maintained by the entity of its collection of heritage assets and information on the extent to which access to the assets is permitted).
(c) The accounting policies adopted for heritage assets, including details of the measurement bases used.
(d) For heritage assets that have not been recognised in the statement of financial position, the notes to the financial statements shall:
(i) explain the reasons why;
(ii) describe the significance and nature of those assets; and
(iii) disclose information that is helpful in assessing the value of those heritage assets.
(e) Where heritage assets are recognised in the statement of financial position the following disclosure is required:
(i) the carrying amount of heritage assets at the beginning of the reporting period and the reporting date, including an analysis between classes or groups of heritage assets recognised at cost and those recognised at valuation; and
(ii) where assets are recognised at valuation, sufficient information to assist in understanding the valuation being recognised (date of valuation, method used, whether carried out by external valuer and if so their qualification and any significant limitations on the valuation).
(f) A summary of transactions relating to heritage assets for the reporting period and each of the previous four reporting periods disclosing:
(i) the cost of acquisitions of heritage assets;
(ii) the value of heritage assets acquired by donations;
(iii) the carrying amount of heritage assets disposed of in the period and proceeds received; and
(iv) any impairment recognised in the period.
The summary shall show separately those transactions included in the statement of financial position and those that are not.
(g) In exceptional circumstances where it is impracticable to obtain a valuation of heritage assets acquired by donation the reason shall be stated.
Disclosures can be aggregated for groups or classes of heritage assets, provided this does not obscure significant information.
34.56 Where it is impracticable to do so, the disclosures required by paragraph 34.55(f) need not be given for any accounting period earlier than the previous comparable period, and a statement to the effect that it is impracticable shall be made.
34.13.2 OmniPro comment
34.13.2.1 Heritage asset – defined
A heritage asset is a tangible or intangible asset with historical, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture. An asset may have the attributes of a heritage asset, for example it may be of historic or artistic importance, but unless it is also held and maintained for its contribution to knowledge and culture then it will not fall within the definition of a heritage asset as is made clear from Section 34.50 of FRS 102. Section 34.50 of FRS 102 states where works of art and similar objects are held by commercial entities, these are not heritage assets because they are not maintained principally for their contribution to knowledge and culture (these assets shall therefore be accounted for in accordance with Section 17 of FRS 102 in full and the above 3 exceptions are not applied).
34.13.2.2 Recognition and measurement
Heritage assets are accounted for under the rules of Section 17 Property, plant and equipment (i.e. on a cost or revaluation basis) as per Section 34.49 of FRS 102. See the detailed rules in Section 17 at 17.2.3.3, 17.2.4.2, 17.2.5.2 for accounting for such assets but in addition:
- Where the cost cannot be measured then this fact should be disclosed and no need to include at cost. (Section 34.53 of FRS 102)
- It should be identified separately from other tangible assets (Section 34.52 of FRS 102)
- And reviewed for indicators of impairment under Section 27 of FRS 102 at the end of each reporting period (Section 34.54 of FRS 102)
34.13.2.3 What about old heritage assets where there are no records to determine cost
Section 34.52 of FRS 102 requires cost to be included initially except where it has not been purchased or capitalised recently. For such assets where the cost information is not available without incurring costs which is not commensurate to with the benefits of the users of the accounts, then it must be disclosed in the financial statements.
Heritage assets are account for in line with section 17 of FRS 102, at cost less accumulated depreciation/impairment or at revalued amount less accumulated depreciation/impairment.
34.13.2.4 Where should heritage assets be disclosed on the balance sheet
To be disclosed on the face of balance sheet under fixed assets as per Section 34.52 of FRS 102.
34.13.2.5 Impairments
Section 27 of FRS 102 deals with impairments on heritage assets. As per Section 34.54 of FRS 102 at each period end the assets must be reviewed for indicators of impairment as detailed at 24.5.2. See the impairment requirements in Section 27 at 27.3.2.
34.13.2.5.1 Possible reasons for impairment
Reasons for impairment of Heritage assets as stated in Section 34.54 of FRS 102 include:
- Where the property has suffered physical damage
- Where the property has suffered damage;
- Where there is doubts about its authenticity.
34.13.2.6 Useful life and residual value
Useful life ascertained with some heritage assets not having to be depreciated as residual balance is high or the lives are indefinite. See further details at 17.2.6.1.
34.13.2.7 Heritage assets received free of charge
Where cost cannot be determined where received free of charge, then is must be carried at valuation. If valuation cannot be reliably measured then it does not need to be recognised on the balance sheet or of it cannot be valued without undue cost. instead disclosures are required in the notes explaining the reason, why, describe the significance and nature of assets and disclose information that is helpful to assessing the value of those heritage assets
34.13.2.8 Disclosures
34.13.2.8.1 Overview
Sections 34.55 to 34.56 of FRS 102 provides the disclosures in respect of heritage assets.
Any movements on the heritage assets to be disclosed similar to property, plant and equipment in the notes. There is a requirement to show split by assets held by cost and valuation as well as an analysis by class.
Among the disclosure requirements are a requirement to include a summary of transactions relating to heritage assets for the reporting period and each of the previous four reporting periods disclosing:
(i) the cost of acquisitions of heritage assets;
(ii) the value of heritage assets acquired by donations;
(iii) the carrying amount of heritage assets disposed of in the period and proceeds received; and
(iv) any impairment recognised in the period. The summary shall show separately those transactions included in the statement of financial position and those that are not.
34.13.2.8.2 Illustration of some of the disclosure requirements for heritage assets
1. Heritage Assets
| Property | XXXX | Total | |
| CU | CU | CU | |
| Costs | |||
| At beginning of year | 207,473 | 150,038 | 891,013 |
| Additions in year | 1,295,000 | 165,000 | 1,586,437 |
| Revaluation | 500,000 | – | 500,000 |
| Disposals in year | – | (93,359) | (93,359) |
| At end of year | 1,502,473 | 221,679 | 2,984,091 |
| Depreciation | |||
| At beginning of year | 187,723 | 111,836 | 705,128 |
| Charge for Year | 37,543 | 26,799 | 149,999 |
| Revaluation | (125,000) | – | (125,000) |
| On disposals | – | (42,060) | (42,060) |
| Impairment | – | – | 100,000 |
| At end of year | 100,266 | 96,575 | 788,067 |
| Net book value | |||
| At 31 December 2015 | 1,752,207 | 125,104 | 2,196,024 |
| At 31 December 2014 | 19,750 | 38,202 | 85,885 |
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Examples
Example 2: Application of the fair value model com.
Example 3: Application of the fair value model – livestock.
Example 4: Biological Assets held at fair value.
Example 5: Extract from notes to the financial statements for biological assets held at fair value.
Example 6: Extract from accounting policies notes for livestock/biological assets carried at cost.
Example 14: Donated goods or services – fixed assets.
Example 15: Donated goods or services – donated goods held for resale – impractical to measure.
Example 16: Donated goods or services – donated goods held for resale – practical to measure.
Example 18: Donated goods or services – donated services.
Example 19: Business Combinations: Gifts of business etc.
Example 20: Business Combinations: Mergers.
Example 21: Concessionary loans – option not to discount.
Example 22: Concessionary loans – option to discount.
Example 24: Accruals model (applicable for FRS 102 only and not Charities SORP) – capital grant.
Example 25: Accruals model (applicable for FRS 102 only and not Charities SORP) – revenue grant.
Example 26: Accruals model (applicable for FRS 102 only and not Charities SORP) – revenue grant.
Example 27: Performance model (applicable for FRS 102 and Charities SORP) – revenue grant.
Example 28: Performance model – Revenue Grant.
Example 29: Capital grants (FRS 102 and FRS 102 SORP – performance model).
Example 30: Grants and performance conditions.
Example 31: Grants and performance conditions.
Example 32: Grants and performance conditions.
Example 33: Grants and performance conditions.
Example 34: Grants and performance conditions.
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