Use this url to cite publication: https://hdl.handle.net/20.500.12259/92341
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Is measurement of biological assets at fair value consistent with the principles of prudence and neutrality?
Type of publication
Tezės kitame recenzuojamame leidinyje / Theses in other peer-reviewed publication (T1e)
Title
Is measurement of biological assets at fair value consistent with the principles of prudence and neutrality?
Is part of
International conference on economic research [elektroninis išteklius] : proceedings book (full texts-abstracts), 19-20th October 2018, Alanya, Turkey. Alanya: Alanya Alaaddin Keykubat University, 2018
Date Issued
Date Issued |
---|
2018 |
Publisher
Alanya: Alanya Alaaddin Keykubat University, 2018
Extent
p. 121
Field of Science
Abstract
Biological assets
The purpose of this research is to conduct a case study based on analytical data from agricultural enterprises and to estimate how the measurement of biological assets at fair value consistent with the principles of prudence and neutrality. The analysis of scientific literature and practical experience allows for the conclusion that there is no unanimity either among scientists or practitioners on the selection of the measuring model for biological assets cultivated by agricultural enterprises or used for harvesting agricultural produce. Both biological asset measuring methods, the fair value less costs to sell model and the cost model, have advantages and disadvantages. The main advantage of the fair value less cost model is that the fair value of biological assets reflects the processes of biological transformation. The case study aimed at answering the following questions: What effect does the change in the measuring method from the cost model to the fair value less costs to sell model have on the financial standing and the overall performance of an undertaking? What factors influence the change in the biological asset value over a reporting period when the assets are measured at fair value less costs to sell? What effect does the change in the biological asset measuring method have on the key financial ratios, which reflect the financial attractiveness of the business concerned? The research used analytical data and information on biological assets supplied in financial statements of three agricultural enterprises. The agricultural enterprises chosen for the research are specializing in different areas. All those undertakings use the historical cost approach to measure biological assets.
The research outlines advantages and disadvantages of both methods used to measure biological assets, reveals changes in reflecting information on biological assets in financial statements following a change in the measuring method, and demonstrates effect of the change in the measuring method on the financial standing, overall performance and financial attractiveness. The research reveal specific issues related to the application of the method of fair value less costs to sell for measuring of biological assets. The problems identified by the research undermine confidence in the objectivity of the fair value less costs to sell model for biological asset measurement and suggest a conclusion that the cost model is more relevant for measuring those assets. If biological assets are chosen to be measured at fair value less costs to sell, the cost of produce sold and the general and administrative expenses were decreased, and the performance, profitability and asset turnover ratios were improved. The research results show that if biological assets are chosen to be measured at fair value less costs to sell, there is a risk to breach the principles of prudence and neutrality and to window-dress the financial statements.
Type of document
type::text::conference output::conference proceedings::conference paper
Language
Anglų / English (en)
Coverage Spatial
Turkija / Turkey (TR)