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Accounting in Agriculture: Measurement practices of listed firms

Author

Listed:
  • Rute Gonçalves

    (School of Economics and Management, University of Porto)

  • Patrícia Lopes

    (School of Economics and Management, University of Porto)

Abstract

Based on the International Accounting Standard (IAS) 41 – Agriculture, this paper examines measurement practices of biological assets and their drivers, under accounting choice theory, given data from 2012. Taking into consideration 324 listed firms worldwide that have adopted International Financial Reporting Standards (IFRS) until 2011, the empirical evidence supports that while a large number of firms measures biological assets at fair value, there are others that refute the presumption of fair value reliability and measure biological assets at historical cost. The research model includes a binary dependent variable for the measurement practice (fair value or historical cost) and explores several factors that are expected to be related to the measurement of biological assets, namely, a country-level variable – legal status and firm-level variables – biological assets intensity, firm size, listing status, regulation expertise, potential growth, leverage and sector. It was found that the adoption of fair value measurement of biological assets is positively influenced by all variables, except by the negative impact of potential growth and by the absence of relationship with leverage. This paper seeks to help standard setters to better understand measurement practices, their drivers and constraints concerning biological assets, given the current discussion under the IAS 41.

Suggested Citation

  • 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.
    • Handle: RePEc:por:fepwps:557
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    File URL: http://www.fep.up.pt/investigacao/workingpapers/wp557.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Fathi Maurits Muhamada & Erna Harnawati & Satria Yudhia Wijaya, 2021. "Accounting treatment analysis of agricultural activities in presenting financial statements based on PSAK 69 IN PT IJ," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(4), pages 255-263, June.

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    More about this item

    Keywords

    biological assets; measurement; accounting choice; financial reporting; regulation;
    All these keywords.

    JEL classification:

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

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