Biological assets

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Biological assets
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Biological assets "are non-human living assets, and include animal and plants there are controlled by an entity"[1]. Management of biological assets is one of the features of agricultural activities.

Main categories of biological assets

There are two main categories of biological assets. The first one can be characterized as bearer biological assets. This group includes either animal and plant bearers which generate income from their output more than once. Bearer biological assets include for example cattle used for milk production, sheep used for wool production, vineyards and orchards[2].

The second group of biological assets is defined as consumable biological assets. "They generate revenue only once when the asset is slaughtered, harvested or sold as biological assets"[3].

Considering the realization time of revenue, consumable biological assets may be subdivided into[4]:

  • long-term consumables e.g. animals intended for sale in the future, forests,
  • short-term consumables such as vegetables, flowers, and animals awaiting slaughter.

Note that goods derived from biological assets are not highlighted in any of the groups. Due to the International Accounting Standard (IAS) 41 they are classified as agricultural produce. Full classification is provided in paragraph 4 of the Standard[5]:

  • biological assets e.g. sheep, dairy cattle, vines, plants,
  • agricultural produce e.g. wool, milk, grapes, cotton,
  • products that are the result of processing after harvest e.g. yarn, cheese, wine, thread.

Features of biological assets

A fundamental feature of biological assets is their capability of biological transformation. They can be modified through the process of production, growth or procreation. Therefore, agricultural activity concentrates on the management of biological transformation by stabilizing and enhancing necessary conditions such as nutrient levels, temperature, moisture, and light. This potential of biological assets can be used for sale, the production of agricultural goods and/or additional biological assets[6].

Biological assets depend on the law of nature so their possession is associated with not only market risks but also with natural hazards such as plant and animal diseases, floods, droughts, insect pests etc.[7].


Because biological assets were key component of agriculture activity, choice of relevant measurement attribute for biological assets became significant for agricultural accounting[8].

Standards of accounting for agricultural activity are established by the International Accounting Standard (IAS) 41. "IAS 41 applies to biological assets, agricultural produce at the point of harvest, and government grants received for agricultural activity"[9].

"As a basic rule, IAS 41 requires that biological assets shall be measured on initial recognition and at subsequent reporting dates at fair value less costs to sell, unless fair value cannot be reliably measured"[10].


  1. Henderson S., Peirson G., Herbohn K., Howieson B., 2015, p. 729
  2. Henderson S., Peirson G., Herbohn K., Howieson B., 2015, p. 729
  3. Henderson S., Peirson G., Herbohn K., Howieson B., 2015, p. 729
  4. Du W., 2013, p. 325
  5. Everingham G.K., Kleynhans J.A.E., Posthumus L.C., 2007, p. 180
  6. Henderson S., Peirson G., Herbohn K., Howieson B., 2015, p. 729
  7. Du W., 2013, p. 324-325
  8. Du W., 2013, p. 323
  9. Ankarath N., Mehta K.J., Ghosh T.P., Alkafaji Y.A., 2010, p. 267
  10. Gonçalves R., Lopes P.T., 2018


Author: Angelika Marzecka