Fair value for biological assets

Posted by on Jun 10, 2012 in Uncategorized | 2 comments



Fair value is the same with market value of biological assets

Fair Value: a base measurement is considered more independent and impartial. Fair Value by practitioners and academics of financial accounting and Appraisers in Indonesia was identified as the Market Value. Appraisal services give priority to market-based evidence in determining Fair Value. If market-based evidence does not exist, then the use of depreciated replacement cost approach and income approach can be used (IAS 16).

Valuer / Appraiser in making estimates and opinions about the economic value of a property both tangible and intangible assets based on an objective analysis of facts and relevant by using a specific valuation method and refers to the principles generally accepted appraisal. The assessment process is based on the comparison of data from a similar biological assets and be done with adjustments for factors that affect the Market Value of Biological assessed valuation at the time called the Market Data Approach. While the costs incurred to acquire biological assets as at the time of the valuation at the time of the cutoff date, taking into account the condition of biological assets (correction factors that affect the condition of biological assets) is called by the cost approach. Meanwhile, the income approach may also be applied, this is due to biological assets are viewed as income producing assets

The process in Market Data Approach is as follows: Analysis of the factors that affect the value of the object Collect data comparison and analysis of data in accordance with biological assets / objects; Make adjustments for factors that affect the value, of the biological assets to be assessed; Calculate, Indicative value of biological assets in value, and then do a comparative weighting of biological assets and Determine the Market Value of biological assets. With the following formula: Indicative Market Value = Market Data comparison of biological assets ± Adjustments to the factors which will affect the market value of the object

Steps as follows for cost approach: calculate the amount of the costs required to obtain / acquire biological assets such as conditions on the date of valuation; making adjustments to the conditions of biological assets and biological assets Indication Market Value = ? (costs incurred to acquire new biological assets) – correction factor biological condition of assets.

Income approach with the stages of work as follows: Do research the variables that make up Income & Expense of biological assets and compare with other similar biological assets to obtain income and expenditure which mark to market; Estimating Potential Income from assets acquired biological standards based on research; Estimate the amount of adjustment of biological assets according to the physical condition; Calculating Effective Gross Income by multiplying the level of conformity; Estimated amount of total operating costs, consisting of fixed costs, variable costs and reserve replacement costs; Calculating Net Operating Income by subtracting the total of all operating expenses from effective gross income; Define the method and amount of the discount rate; Add the present value of all net revenue from biological assets.

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2 Responses to “Fair value for biological assets”

  1. plaese i wnat to learn about biological Asset, items of opening balance, physical changes, closing balance and reconcile and profit.

    please show me some examples.

    thank you

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