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Fair value accounting in the agricultural sector: some implications for international accounting harmonization

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  • Charles Elad

Abstract

In a recent issue of this journal, Argiles and Slof (2001) analysed the main features of the European Farm Accountancy Database Network (FADN) against the backdrop of IAS 41, the new international accounting standard on agriculture, and arrived at the conclusion that FADN offers an excellent tool for operationalizing IAS 41 in European farms. The present study revisits some of the key issues in Argiles and Slof's paper in a wider international context and highlights their implications for the harmonization of farm accounting practices around the world. In particular, this paper contends that there are some key provisions of IAS 41 that are incompatible with the European Union Fourth Directive which Argiles and Slof (2001, p. 364) apparently overlooked by focusing only on aspects of the directive that sanction current value measurement and ignoring those that relate to the treatment of associated holding gains or losses. Furthermore, this paper also demonstrates that Argiles and Slof's argument that simplicity is another improvement of IAS 41 vis-a-vis the French Plan Comptable General Agricole is flawed. Indeed, it is shown here that it would be virtually impossible to implement IAS 41 in Francophone countries in the absence of a fundamental revision, if not complete abandonment, of the plan comptable, at least in view of major conceptual differences between the notions of income, production and value added espoused by national statisticians and those enshrined in IAS 41.

Suggested Citation

  • Charles Elad, 2004. "Fair value accounting in the agricultural sector: some implications for international accounting harmonization," European Accounting Review, Taylor & Francis Journals, vol. 13(4), pages 621-641.
    • Handle: RePEc:taf:euract:v:13:y:2004:i:4:p:621-641
    DOI: 10.1080/0963818042000216839
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    References listed on IDEAS

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    1. K.F Herbohn & J.L Herbohn, 1999. "Accounting for Forests in Social, Economic and Political Contexts," Accounting Forum, Taylor & Francis Journals, vol. 23(4), pages 408-440, December.
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    Cited by:

    1. De George, Emmanuel T. & Li, Xi & Shivakumar, Lakshmanan, 2016. "A review of the IFRS adoption literature," LSE Research Online Documents on Economics 67599, London School of Economics and Political Science, LSE Library.
    2. Arimany, N. & Farreras, M.A. & Rabaseda, J., 2013. "Alejados de la NIC 41: ¿Es correcta la valoración del patrimonio neto de las empresas agrarias?," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 13(01).
    3. Emmanuel T. De George & Xi Li & Lakshmanan Shivakumar, 2016. "A review of the IFRS adoption literature," Review of Accounting Studies, Springer, vol. 21(3), pages 898-1004, September.
    4. Argilés bosch, Josep M.a & Aliberch, Anna Sabata & Blandón, Josep García, 2012. "A Comparative Study of Difficulties in Accounting Preparation and Judgement in Agriculture Using Fair Value and Historical Cost for Biological Assets Valuation," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 15(1), pages 109-142.
    5. Vladu Alina Beattrice, 2013. "FAIR VALUE MEASUREMENT IN AGRICULTURE AND THE POTENTIAL TO MISLEAD Abstract: Applying fair value measurement to tangible and intangible assets in agriculture cannot be risk free. Twofold reasons can b," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 5, pages 95-98, October.
    6. Patrik Svoboda & Hana Bohušová, 2017. "Amendments to IAS 16 and IAS 41: Are There Any Differences between Plant and Animal from a Financial Reporting Point of View?," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 65(1), pages 327-337.
    7. Claudine Mangen & Alexia Paduano & Bianca Paduano & Jessica Hadzurik & Juliano Leggio & Kayla Russo, 2020. "Smoke and Mirrors? Disclosures in the Marijuana Industry in Canada," Accounting Perspectives, John Wiley & Sons, vol. 19(3), pages 149-179, September.
    8. Elad, Charles & Shah, Neeta & Agyeman, Charles, 2023. "Accounting classification in the era of International Financial Reporting Standards: The case of Africa," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 51(C).
    9. Comello, Stephen D. & Maltais-Landry, Gabriel & Schwegler, Benedict R. & Lepech, Michael D., 2014. "Firm-level ecosystem service valuation using mechanistic biogeochemical modeling and functional substitutability," Ecological Economics, Elsevier, vol. 100(C), pages 63-73.
    10. Malgorzata Wegrzynska & Alina Nowotarska, 2021. "Measuring and Valuation of Biological Assets: A Research Study," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 331-345.
    11. Rute Gonçalves & Patrícia Lopes, 2014. "Accounting in Agriculture: Disclosure practices of listed firms," FEP Working Papers 530, Universidade do Porto, Faculdade de Economia do Porto.
    12. Giraudeau, Martin, 2017. "The farm as an accounting laboratory: an essay on the history of accounting and agriculture," LSE Research Online Documents on Economics 74106, London School of Economics and Political Science, LSE Library.
    13. Hana BOHUŠOVÁ & Patrik SVOBODA & Danuše NERUDOVÁ, 2012. "Biological assets reporting: Is the increase in value caused by the biological transformation revenue?," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(11), pages 520-532.
    14. Hana BOHUSOVA & Patrik SVOBODA, 2017. "Will the amendments to the IAS 16 and IAS 41 influence the value of biological assets?," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(2), pages 53-64.
    15. Ramona Laptes & Adriana Florina Popa, 2010. "The History And The Development Of The Financial Reporting Specific To The Romanian Agriculture," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 57, pages 15-28, november.
    16. Hana Bohusova & Patrik Svoboda & Petr Valouch, 2012. "IFRS for SMEs: What will the implementation of IFRS for SME bring for timber industry?," MENDELU Working Papers in Business and Economics 2012-27, Mendel University in Brno, Faculty of Business and Economics.
    17. Josep Ma. Argiles (UB) & Josep Garcia Bladon (IQS) & Teresa Monllau (UPF), 2009. "Fair value versus historic cost Valuation for Biological assets: Implications for the quality of financial information," Working Papers in Economics 215, Universitat de Barcelona. Espai de Recerca en Economia.
    18. Liyu He & Sue Wright & Elaine Evans, 2021. "The impact of managerial discretion on fair value information in the Australian agricultural sector," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 1897-1930, April.
    19. Li Yu (Colly) He & Sue Wright & Elaine Evans, 2018. "Is fair value information relevant to investment decision-making: Evidence from the Australian agricultural sector?," Australian Journal of Management, Australian School of Business, vol. 43(4), pages 555-574, November.
    20. M. Stárová & H. Čermáková & T. Hlavsa & H. Vostrovská & M. Levá, 2016. "Evaluation of applicability of IAS 41 - Agriculture to the valuation of growing forest stands and their accounting treatment in the Czech Republic," Journal of Forest Science, Czech Academy of Agricultural Sciences, vol. 62(9), pages 429-440.
    21. Pascale Bueno Merino & Samuel Grandval & Marc Feuilloley, 2014. "L’analyse du business model par les normes IAS-IFRS : le rôle de la ligne spécifique du compte de résultat," Post-Print hal-01899386, HAL.
    22. Rute Gonçalves & Patrícia Lopes, 2015. "Accounting in Agriculture: Measurement practices of listed firms," FEP Working Papers 557, Universidade do Porto, Faculdade de Economia do Porto.
    23. Elad, Charles, 2015. "The Development of Accounting in the Franc Zone Countries in Africa," The International Journal of Accounting, Elsevier, vol. 50(1), pages 75-100.
    24. Kobiljon Khushvakhtzoda (Barfiev) & Dmitry Nazarov, 2021. "The Fuzzy Methodology’s Digitalization of the Biological Assets Evaluation in Agricultural Enterprises in Accordance with the IFRS," Mathematics, MDPI, vol. 9(8), pages 1-16, April.
    25. Lambert Jerman, 2015. "Les Enjeux De L'Application Des Normes Ias-Ifrs : L'Etude Des Preparateurs Des Comptes, Une Perspective De Recherche Encore Inexploree," Post-Print hal-01188736, HAL.

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