Development of Account and Financial Statement Report Methods of Operations Formulating Economic Result from Biotransformation of Poultry Biological Assets
Russian Timiryasev State Agricultural University “Accounting in Agriculture” (2015) No. 12. pp. 7-17
11 Pages Posted: 22 May 2016
Date Written: 2015
The article touches the features of income, expenses and financial results accounting from biotransformation of biological assets, as well as the formation of accounting (financial) statements, and problems of assets evaluation in the poultry industry.
The authors of the article argue and prove that current assets evaluation methods are incomplete as they do not indicate a clear purpose and do not provide a reliable measurement concept. The term "fair value" will solve the problem.
Considering the accounting and financial result reports from the biological assets and agricultural produce after their fair value measurement the authors think that it is necessary to introduce additional accounts in the working bookkeeping chart of the investigated poultry farms: Account 92 "Gains and losses resulting from the biotransformation of biological assets", which are identified by comparison of the potential and fair financial results (profit, loss) account; Account 93 "Gains and losses from biotransformation of biological assets; Account 95 "Total gains and losses from biotransformation of biological assets". Synthetic account 12 "Biological assets of poultry" is supposed to be used to account biological assets of poultry (birds, their weight gain and live weight). It is recommended to use concurrently existing and special methods of income, expenses and financial results accounting: the valid method - in order to create a report on farm financial results; and a proposed one - in order to create a special reference - an appendix to the report about farm financial results from biological assets biotransformation.
For the full value realization of farm accounting (financial) statements it is proposed to amend the poultry farm balance sheet: in the first section of the poultry firm balance it is necessary to point out 'non-current biological assets' as a separate article in the assets and to exclude article 1160 ‘Income-bearing investments in tangible assets", due to the absence of income-bearing investments in tangible assets in poultry enterprises; in the second section of the balance sheet it is necessary to highlight the article "Current biological assets and agricultural produce" in reserves composition (Article 1210). In addition, the balance of current and non-current biological assets and agricultural produce should be measured at fair value.
Keywords: biotransformation, fair value of assets, evaluation, poultry
JEL Classification: Q1
Suggested Citation: Suggested Citation