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Fair value versus historic cost Valuation for Biological assets: Implications for the quality of financial information

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  • Josep Ma. Argiles (UB)
  • Josep Garcia Bladon (IQS)
  • Teresa Monllau (UPF)

    (Universitat de Barcelona)

Abstract

This research finds neither significant differences in earnings and revenues for farms using fair value (FV) for biological assets with respect to those valuing at historic cost (HC), nor an increase in their volatility. It does not bring about differences in profitability, accounting manipulation and farm cash flows predictability either. On the contrary, most tests reveal higher predictive power of future earnings under FV. The study also provides evidence on flawed HC accounting practices in the agricultural sector and concludes that FV seems an interesting tool for the predominant small holdings in the agricultural sector in the European Union.

Suggested Citation

  • 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.
    • Handle: RePEc:bar:bedcje:2009215
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    Cited by:

    1. 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.

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    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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