International accounting standard (IAS) 41: What are the implications for reporting forest assets?

Kathleen Herbohn; John L Herbohn

doi:10.1007/s11842-006-0009-1

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International accounting standard (IAS) 41: What are the implications for reporting forest assets?

Journal article

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International accounting standard (IAS) 41: What are the implications for reporting forest assets?

Kathleen Herbohn and John L Herbohn

Small-scale Forest Economics, Management and Policy, Vol.5(2), pp.175-189

2006

DOI: https://doi.org/10.1007/s11842-006-0009-1

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Abstract

Forestry Sciences

Applied Economics

Policy and Administration

agricultural accounting

forestry accounting

international accounting standards

IAS 41

AASB 1037

This paper investigates the implications of International Accounting Standard 41 (IAS 41) for European Union (EU) entities reporting on material holdings of forest assets. To all intents and purposes, Australia has been a test for IAS 41 because of the close similarities between IAS 41 and the relevant Australian regulation on forestry that has been operational for the last four years. The Australian reporting experience is used to identify potential implications for EU reporting entities. Evidence suggests that constituents' key concerns with IAS 41 relate to the measurement1 of biological assets at fair value and the inclusion in income of unrealised gains or losses from measuring these assets at fair value. These concerns are borne out by the Australian experiences. Evidence is presented that suggests that compliance with IAS 41 will allow statement preparers a choice of methods to determine the fair value of timber assets. Additionally, it seem likely that the recognition of unrealised gains and losses from timber assets from changes in fair value and the harvest of agricultural produce will markedly affect income statements, introducing greater volatility into reported income. The impact has been greater for government departments. The median timber gain expressed as a percentage of net profit ranged from 44.5% to 79.9% in individual years. An unresolved issue has been identified - do such accounting procedures reflect the nature of investment in forestry?

Details

Title: International accounting standard (IAS) 41: What are the implications for reporting forest assets?
Authors: Kathleen Herbohn (Author) - University of Queensland
John L Herbohn (Author) - University of Queensland
Publication details: Small-scale Forest Economics, Management and Policy, Vol.5(2), pp.175-189
Publisher: Springer Netherlands
DOI: 10.1007/s11842-006-0009-1
ISSN: 1873-7617
Organisation Unit: University of the Sunshine Coast, Queensland; Tropical Forests & People Research Centre; Australian Centre for Pacific Islands Research; Forest Research Institute
Language: English
Record Identifier: 99450510902621
Output Type: Journal article

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