The Canadian Accounting Standards Board recently released new Section 3041 Agriculture which sets out principles for the recognition, measurement and disclosure of biological assets and the harvested product of biological assets which are held by an agricultural producer. The new guidance is expected to be transformational for many agricultural producers that prepare financial statements in accordance with Accounting Standards for Private Enterprises (ASPE) or Accounting Standards for Not for Profit Organizations (ASNPO) as they may need to:
- revise their existing accounting policies for recognizing and measuring biological assets and the harvested products of biological assets; and/or
- track information that was not previously retained in order to apply the new accounting requirements.
The new guidance is effective for fiscal periods beginning on or after January 1, 2022.
Grant Thornton LLP has released a series of publications which explain some of the new guidance contained in Section 3041 and provide practical insights and examples to help financial statement preparers and users evaluate the impact on an enterprise’s financial statements. This publication, which is the first in the series, looks at some key definitions and the scope of the new standard. The other publications in this series address the following topics:
- Part 2: Recognition and Measurement of Agricultural Inventories;
- Part 3: Recognition and Measurement of Productive Biological Assets; and
- Part 4: Presentation, Disclosure and Transition Requirements.
Readers are encouraged to read the publications in order. Furthermore, enterprises that expect to be impacted by Section 3041 should also refer to the original text of the Standard to assess and understand the implications for their specific situation.