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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II RECOGNITION AND INITIAL MEASUREMENT CHAPTER III SUBSEQUENT MEASUREMENT CHAPTER IV HARVEST AND DISPOSAL CHAPTER V DISCLOSURE CHAPTER I GENERAL PROVISIONS Article 1. For the purposes of regulating the recognition and measurement of biological assets related to the agricultural production as well as the disclosure of related information, these Standards are formulated in accordance with the Accounting Standards for Enterprises-Basic Standards. Article 2. Biological assets refer to living animals and plants. Article 3. Biological assets are classified into consumptive biological assets, productive biological assets, and public welfare biological assets. The consumptive biological assets refer to the biological assets held for sale, or biological assets harvested as agricultural products in the future, including growing field crops, vegetables, timber forests, livestock on hand, etc. The productive biological assets refer to the biological assets held for producing agricultural products, rendering labor services, renting and other purposes, including the economic forests, fuel forests, productive livestock, draught animals, etc. The public welfare biological assets refer to the biological assets which mainly aim to protection or environmental protection, including anti-wind and sand-fixing forests, water and land conservation forests, water source conservation forests, etc. Article 4. The following items shall be governed by other relevant accounting standards: (1) The agricultural products after the harvest shall be governed by the Accounting Standards for Enterprises No. 1-Inventories; and (2) The government grants relevant to the biological assets shall be governed by the Accounting Standards for Enterprises No. 16-Government grants. CHAPTER II RECOGNITION AND INITIAL MEASUREMENT Article 5. No biological asset may be recognized unless it satisfies the following conditions simultaneously: (1) The enterprise possesses or controls this biological asset due to past transaction or event; (2) The economic benefits or service potential related to this biological asset is likely to flow into the enterprise; and (3) The cost of this biological asset can be measured reliably. Article 6. A biological asset shall be initially measured at its cost. Article 7. The cost of a purchased biological asset includes the purchase price, relevant taxes, freight, insurance premium and other disbursements that may be directly attributable to the purchase of this asset. Article 8. The cost of any consumptive biological asset by way of self-planting, self-cultivating, self-breeding shall be determined in pursuance of the following provisions: (1) The cost of self-planting crops and vegetables includes the expenses for the seeds, fertilizers, pesticides and other materials and labor, indirect expenses to be apportioned, and other necessary disbursements prior to the harvest; (2) The cost of consumptive biological asset such as self-cultivating forest includes the necessary disbursements for forestation, forest tending, forest operating facilities, testing of good species, investigation and design, indirect expenses to be apportioned, etc.; (3) The cost of self-breeding fattening livestock includes the necessary disbursements for feed and labor, indirect expenses to be apportioned, etc. prior to the sale; and (4) The cost of breeding aquatic animals and plants includes the expenses for materials such as seedlings, feedstuffs, fertilizers, labor expenses, indirect expenses to be apportioned, and other necessary disbursements. Article 9. The cost for self-breeding productive biological asset shall be determined according to the following provisions: (1) The cost of self-planting productive biological assets includes the necessary disbursements for forestation, forest tending, forest operating facilities, testing of good species, investigation and design, indirect expenses to be apportioned, etc.; and (2) The cost of self-breeding productive livestock and draught animals includes expenses for feedstuffs and labor, indirect expenses to be apportioned, and other necessary disbursements incurred before achieving the expected production and business operation purpose (being grown up). The phrase "achieving the expected production and business operation purpose" means that, after the productive biological materials enter into the normal production period, they may produce agricultural products, provide labor services, be rented out stably for several consecutive years. Article 10. The cost of self-planting public welfare biological assets shall be determined on the necessary disbursements for forestation, forest tending, forest protection, forest operating facilities, testing of good species, investigation and design, indirect expenses to be apportioned, etc. prior to the canopy closure. Article 11. The borrowing costs, which should be recorded in the cost of biological assets, shall be handled in pursuance to the Accounting Standards for Enterprises No. 17-Borrowing Costs. The borrowing costs incurred for consumptive biological assets as forest shall be stopped from being capitalized at the canopy closure. Article 12. An investor shall determine its cost of a biological asset on the basis of the value as stipulated in the investment contract or agreement, unless it is stipulated in the contract or agreement that the fair value is not applicable. Article 13. The cost of a biological asset sourced from the nature shall be determined on the basis of its nominal amount. Article 14. The cost of biological assets obtained from the exchange of non-monetary assets, debt restructuring and merger of enterprises shall be determined under the Accounting Standards for Enterprises No. 7-Exchange of Non-monetary Assets, Accounting Standards for Enterprises No. 12-Debt Restructuring and Accounting Standards for Enterprises No. 20-Merger of Enterprises, respectively. Article 15. The subsequent expenditures for the biological assets as additional forest planting due to selective felling, intermediate felling, or tending and improvement felling shall be recorded in the cost of the biological asset as forest. The subsequent disbursements for the management and protection or for the breeding of a biological asset after canopy closure or after the realization of the expected production and business operation purpose shall be recorded in the profits and losses of the current period. CHAPTER III SUBSEQUENT MEASUREMENT Article 16. An enterprise shall conduct subsequent measurements for the biological assets pursuant to the provisions of Articles 17 through 21 of these Standards except for the items as provided for in Article 22 of these Standards. Article 17. An enterprise shall, according to the schedule, compute the depreciation charges of any productive biological asset whose expected production and business purpose has been realized, and shall, on the basis of the purpose of the biological asset, record it in the cost or current profits and losses of the relevant asset. Article 18. An enterprise shall, according to the nature of a productive biological asset, the information about the utilization, and the manner in which the relevant expected economic benefits are realized, reasonably determine the useful life, estimated net salvage value, and depreciation methods of this productive biological asset. The depreciation methods available include the straight-line method, unit-of-production method, unit-of-output method, etc. Once the useful life, expected net salvage value, or depreciation method of a productive biological asset is determined, it shall not be changed at will unless, however, it meets the provisions of Article 20 of these Standards. Article 19. To determine the useful life of a productive biological asset, an enterprise shall take into account the following factors: (1) The expected output capacity or volume of physical output of the asset; (2) The expected tangible wear and tear of the asset such as decrepitude of productive livestock and draught animals and the aging of economic forests; and (3) The expected intangible wear and tear of the asset, such as the relative decrease or degrade in the production capacity of the productive biological asset, or the quality of the agricultural products produced thereby, the relative outmode of the agricultural products of the productive biological asset which is a result of the change of market demand. Article 20. An enterprise shall, at least at the end of each year, review the useful life, expected net salvage value, and depreciation method of the productive biological assets. If there is any disparity between the useful life or the forecasted net salvation value and the previously estimated value a fixed asset, or if any significant change is made to the manner in which the relevant economic benefits are to be realized, it shall be deemed as a change in the accounting estimates, and thus the useful life or the expected net salvage value or depreciation method of the productive biological asset shall be adjusted or changed under the Accounting Standards for Enterprises No. 28-Changes in Accounting Policies and Estimates‚ and Correction of Errors. Article 21. An enterprise shall, at least at the end of each year, examine the consumptive biological assets and productive biological assets. If any reliable evidence shows that the realizable net value of any consumptive biological asset or the recoverable amount of any productive biological asset is lower than its book value due to natural disaster, plant diseases and insect pests, animal disease or change of market demand, the enterprise shall, on the basis of the difference between the realizable net value or the recoverable amount and the book value, make provision for the loss on decline in value of or for the impairment of the biological asset and shall record it in the profits and losses of the current period. The aforesaid realizable net value and recoverable amount shall be determined according to the Accounting Standards for Enterprises No. 1-Inventories and Accounting Standards for Enterprises No. 8-Asset Impairment, respectively. If the factors which cause any impairment of a consumptive biological asset have disappeared, the amount of write-down shall be resumed and shall be reversed from the provision for the loss on decline in value of the consumptive biological asset which has been made. The reversed amount shall be included in the profits and losses of the current period. Once the provision for impairment of a productive biological asset is made, it shall not be reversed. No provision is made for public welfare biological assets. Article 22. Where any exact evidence shows that the fair value of a biological asset can be reliably and continuously obtained, the biological asset shall be measured under the fair value method. To make a measurement through the fair value method, the following conditions shall be satisfied simultaneously: (1) There is an active biological asset market; and (2) It is able to obtain from the market the market prices of the identical or similar biological assets and other relevant information, and is able to make a reasonable estimate about the fair value of the biological asset. CHAPTER IV HARVEST AND DISPOSAL Article 23. The cost of a consumptive biological asset shall, at the time of harvest or sale, be carried over on the basis of its carrying amount. The methods available for the carryover of cost include the weighted average method, specific cost identification method, stock volume proportion method, fixed number of years within rotational felling period method, etc. Article 24. The harvest cost of agricultural products of a productive biological asset shall be determined on the basis of the expenses of the materials and labor, indirect expenses to be apportioned, and other necessary disbursements incurred during the course of output or gathering. The carrying amount of the productive biological asset shall be carried over as the cost of agricultural product by adopting such methods as the weighted average method, specific cost identification method, stock volume proportion method, fixed number of years within rotational felling period method, etc. The agricultural products after the harvest shall be treated in accordance with the Accounting Standards No. 1-Inventories. Article 25. The cost incurred after the purpose of a biological asset is changed shall be determined on the basis of its carrying amount when its purpose is changed. Article 26. At the time of sale, inventory loss, death, damage or destroy of a biological asset, the balance after deducting the carrying amount and the relevant taxes from the disposal income shall be included in the profits and incomes of the current period. CHAPTER V DISCLOSURE Article 27. An enterprise shall, in the notes, disclose the relevant following information related to the biological assets: (1) The categories of biological assets, quantities of physical output and carrying amount of the various biological assets; (2) The accumulative amount of provision for loss on decline in value of various consumptive biological assets, and the useful life, expected net salvage value, depreciation method, amount of accumulative depreciation and accumulative amount of provision for impairment; (3) The categories of biological assets sourced from the nature, obtainment methods and quantities of physical goods; (4) The book value of the biological assets used for guaranties; and (5) The information about the risks related to the biological assets and the risk management measures. Article 28. An enterprise shall, in the notes, disclose the following information about the increase and decrease of biological assets: (1) The biological assets increased due to purchase; (2) The biological assets increased due to self-planting, self-cultivating or self-breeding; (3) The biological assets decreased due to sale; (4) The biological assets decreased due to inventory loss, death, damage or destroy; (5) The depreciation, or provision for loss on decline in value or impairment which has been made; and (6) Other changes. |
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