Subject The article analyzes the possibility and necessity of practical application of major provisions of IAS 41 Agriculture by agricultural goods producers, in particular, fair value measurement of biological assets. Objectives The purpose of the paper is to characterize biological assets in crop farming and livestock breeding, and to justify the possibility to measure biological assets at fair value instead of historical cost. Methods In the study, we employed various methods and techniques, i.e. the monographic method, accounting method, systematization and generalization of scientific and practical material, and other standard methods of scientific knowledge. Results The article presents the classification characteristic of biological assets, defines objective conditions for fair value calculation of biological assets, and shows the inconsistency of various conventional methods for fair value calculation (except market). We emphasize that it is unnecessary and impossible for agricultural goods producers to measure biological assets at fair value (instead of historical cost), except for organizations that prepare consolidated financial statements in full compliance with IFRS. Conclusions and Relevance Under modern socio-economic conditions and without open market of biological assets, it is impossible to determine their fair value. Meanwhile, other methods for fair value calculation are conditional and unreal; they misstate the financial condition and performance of agricultural economic entities. Therefore, it is required to stick to the existing method of biological assets valuation (i.e. at historical cost) to prevent disturbances in the accounting, tax and statistical information systems of the country.
Keywords: biological assets, operating, investment, biological transformation, fair value
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