Commission Regulation (EU) 2015/2113

of 23 November 2015

amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Accounting Standards 16 and 41

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards1, and in particular Article 3(1) thereof,

Whereas:

(1)

By Commission Regulation (EC) No 1126/20082 certain international standards and interpretations that were in existence at 15 October 2008 were adopted.

(2)

On 30 June 2014, the International Accounting Standards Board (IASB) issued amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture entitled Agriculture: Bearer Plants. The IASB decided that plants, which are used solely to grow produce over several periods, known as bearer plants, should be accounted for in the same way as property, plant and equipment in IAS 16 Property, Plant and Equipment, because their operation is similar to that of manufacturing.

(3)

Amendments to IAS 16 and 41 imply by way of consequence amendments to IAS 1, 17, 23, 36 and 40 in order to ensure consistency between international accounting standards.

(4)

The consultation with the European Financial Reporting Advisory Group confirms that the amendments to IAS 16 and IAS 41 meet the criteria for adoption set out in Article 3(2) of Regulation (EC) No 1606/2002.

(5)

Regulation (EC) No 1126/2008 should therefore be amended accordingly.

(6)

The measures provided for in this Regulation are in accordance with the opinion of the Accounting Regulatory Committee,

HAS ADOPTED THIS REGULATION:

Article 1

The Annex to Regulation (EC) No 1126/2008, is amended as follows:

  1. (a)

    International Accounting Standard (IAS) 16 Property, Plant and Equipment is amended as set out in the Annex to this Regulation;

  2. (b)

    IAS 41 Agriculture is amended as set out in the Annex to this Regulation;

  3. (c)

    IAS 1 Presentation of Financial Statements, IAS 17 Leases, IAS 23 Borrowing Costs, IAS 36 Impairment of Assets and IAS 40 Investment Property are amended in accordance with the amendments to IAS 16 and IAS 41 as set out in the Annex to this Regulation.

Article 2

Each company shall apply the amendments referred to in Article 1, at the latest, as from the commencement date of its first financial year starting on or after 1 January 2016.

Article 3

This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 23 November 2015.

For the Commission

The President

Jean-Claude Juncker

ANNEX

Agriculture: Bearer Plants(Amendments to IAS 16 and IAS 41)

Amendments to IAS 16 Property, Plant and Equipment

Paragraphs 3, 6 and 37 are amended and paragraphs 22A and 81K–81M are added.

SCOPE

…

3.This Standard does not apply to:

  1. (a)

    property, plant and equipment classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

  2. (b)

    biological assets related to agricultural activity other than bearer plants (see IAS 41 Agriculture). This Standard applies to bearer plants but it does not apply to the produce on bearer plants.

  3. (c)

    the recognition and measurement of exploration and evaluation assets (see IFRS 6 Exploration for and Evaluation of Mineral Resources).

  4. (d)

    ….

DEFINITIONS

6.The following terms are used in this Standard with the meanings specified:

A bearer plant is a living plant that:

  1. (a)

    is used in the production or supply of agricultural produce;

  2. (b)

    is expected to bear produce for more than one period; and

  3. (c)

    has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.

(Paragraphs 5A–5B of IAS 41 elaborate on this definition of a bearer plant.)

Carrying amount is the amount at which an asset is recognised after deducting any accumulated depreciation and accumulated impairment losses.

…

Elements of cost

…

22A

Bearer plants are accounted for in the same way as self-constructed items of property, plant and equipment before they are in the location and condition necessary to be capable of operating in the manner intended by management. Consequently, references to ‘construction’ in this Standard should be read as covering activities that are necessary to cultivate the bearer plants before they are in the location and condition necessary to be capable of operating in the manner intended by management.

…

Revaluation model

…

37.A class of property, plant and equipment is a grouping of assets of a similar nature and use in an entity's operations. The following are examples of separate classes:

  1. (a)

    …

  2. (g)

    furniture and fixtures;

  3. (h)

    office equipment; and

  4. (i)

    bearer plants.

…

EFFECTIVE DATE AND TRANSITION

…

81K

Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41), issued in June 2014, amended paragraphs 3, 6 and 37 and added paragraphs 22A and 81L–81M. An entity shall apply those amendments for annual periods beginning on or after 1 January 2016. Earlier application is permitted. If an entity applies those amendments for an earlier period, it shall disclose that fact. An entity shall apply those amendments retrospectively, in accordance with IAS 8, except as specified in paragraph 81M.

81L

In the reporting period when Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) is first applied an entity need not disclose the quantitative information required by paragraph 28(f) of IAS 8 for the current period. However, an entity shall present the quantitative information required by paragraph 28(f) of IAS 8 for each prior period presented.

81M

An entity may elect to measure an item of bearer plants at its fair value at the beginning of the earliest period presented in the financial statements for the reporting period in which the entity first applies Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) and use that fair value as its deemed cost at that date. Any difference between the previous carrying amount and fair value shall be recognised in opening retained earnings at the beginning of the earliest period presented.

Amendments to IAS 41 Agriculture

Paragraphs 1–5, 8, 24 and 44 are amended and paragraphs 5A–5C and 62–63 are added.

SCOPE

1.This Standard shall be applied to account for the following when they relate to agricultural activity:

  1. (a)

    biological assets, except for bearer plants;

  2. (b)

    agricultural produce at the point of harvest; and

  3. (c)

    government grants covered by paragraphs 34 and 35.

2.This Standard does not apply to:

  1. (a)

    land related to agricultural activity (see IAS 16 Property, Plant and Equipment and IAS 40 Investment Property).

  2. (b)

    bearer plants related to agricultural activity (see IAS 16). However, this Standard applies to the produce on those bearer plants.

  3. (c)

    government grants related to bearer plants (see IAS 20 Accounting for Government Grants and Disclosure of Government Assistance).

  4. (d)

    intangible assets related to agricultural activity (see IAS 38 Intangible Assets).

3.

This Standard is applied to agricultural produce, which is the harvested produce of the entity's biological assets, at the point of harvest. Thereafter, IAS 2 Inventories or another applicable Standard is applied. Accordingly, this Standard does not deal with the processing of agricultural produce after harvest; for example, the processing of grapes into wine by a vintner who has grown the grapes. While such processing may be a logical and natural extension of agricultural activity, and the events taking place may bear some similarity to biological transformation, such processing is not included within the definition of agricultural activity in this Standard.

4.The table below provides examples of biological assets, agricultural produce, and products that are the result of processing after harvest:

Biological assets

Agricultural produce

Products that are the result of processing after harvest

Sheep

Wool

Yarn, carpet

Trees in a timber plantation

Felled trees

Logs, lumber

Dairy cattle

Milk

Cheese

Pigs

Carcass

Sausages, cured hams

Cotton plants

Harvested cotton

Thread, clothing

Sugarcane

Harvested cane

Sugar

Tobacco plants

Picked leaves

Cured tobacco

Tea bushes

Picked leaves

Tea

Grape vines

Picked grapes

Wine

Fruit trees

Picked fruit

Processed fruit

Oil palms

Picked fruit

Palm oil

Rubber trees

Harvested latex

Rubber products

Some plants, for example, tea bushes, grape vines, oil palms and rubber trees, usually meet the definition of a bearer plant and are within the scope of IAS 16. However, the produce growing on bearer plants, for example, tea leaves, grapes, oil palm fruit and latex, is within the scope of IAS 41.

DEFINITIONS

Agriculture-related definitions

5.The following terms are used in this Standard with the meanings specified:

…

Agricultural produce is the harvested produce of the entity's biological assets.

A bearer plant is a living plant that:

  1. (a)

    is used in the production or supply of agricultural produce;

  2. (b)

    is expected to bear produce for more than one period; and

  3. (c)

    has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.

A biological asset is a living animal or plant.

…

5AThe following are not bearer plants:

  1. (a)

    plants cultivated to be harvested as agricultural produce (for example, trees grown for use as lumber);

  2. (b)

    plants cultivated to produce agricultural produce when there is more than a remote likelihood that the entity will also harvest and sell the plant as agricultural produce, other than as incidental scrap sales (for example, trees that are cultivated both for their fruit and their lumber); and

  3. (c)

    annual crops (for example, maize and wheat).

5B

When bearer plants are no longer used to bear produce they might be cut down and sold as scrap, for example, for use as firewood. Such incidental scrap sales would not prevent the plant from satisfying the definition of a bearer plant.

5CProduce growing on bearer plants is a biological asset.

…

General definitions

8.The following terms are used in this Standard with the meanings specified:

…

Government grants are as defined in IAS 20.

RECOGNITION AND MEASUREMENT

…

24.Cost may sometimes approximate fair value, particularly when:

  1. (a)

    little biological transformation has taken place since initial cost incurrence (for example, for seedlings planted immediately prior to the end of a reporting period or newly acquired livestock); or

  2. (b)

    the impact of the biological transformation on price is not expected to be material (for example, for the initial growth in a 30-year pine plantation production cycle).

…

General

…

44.

Consumable biological assets are those that are to be harvested as agricultural produce or sold as biological assets. Examples of consumable biological assets are livestock intended for the production of meat, livestock held for sale, fish in farms, crops such as maize and wheat, produce on a bearer plant and trees being grown for lumber. Bearer biological assets are those other than consumable biological assets; for example, livestock from which milk is produced and fruit trees from which fruit is harvested. Bearer biological assets are not agricultural produce but, rather, are held to bear produce.

…

EFFECTIVE DATE AND TRANSITION

…

62.

Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41), issued in June 2014, amended paragraphs 1–5, 8, 24 and 44 and added paragraphs 5A–5C and 63. An entity shall apply those amendments for annual periods beginning on or after 1 January 2016. Earlier application is permitted. If an entity applies those amendments for an earlier period, it shall disclose that fact. An entity shall apply those amendments retrospectively in accordance with IAS 8.

63.

In the reporting period when Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) is first applied an entity need not disclose the quantitative information required by paragraph 28(f) of IAS 8 for the current period. However, an entity shall present the quantitative information required by paragraph 28(f) of IAS 8 for each prior period presented.

CONSEQUENTIAL AMENDMENTS TO OTHER STANDARDS

IAS 1 Presentation of Financial Statements

Paragraph 54 is amended.

Information to be presented in the statement of financial position

54.As a minimum, the statement of financial position shall include line items that present the following amounts:

  1. (a)

    …

  2. (f)

    biological assets within the scope of IAS 41 Agriculture;

  3. (g)

    …

IAS 17 Leases

Paragraph 2 is amended.

SCOPE

2.…

However, this Standard shall not be applied as the basis of measurement for:

  1. (a)

    …

  2. (c)

    biological assets within the scope of IAS 41 Agriculture held by lessees under finance leases; or

  3. (d)

    biological assets within the scope of IAS 41 provided by lessors under operating leases.

IAS 23 Borrowing Costs

Paragraphs 4 and 7 are amended.

SCOPE

…

4.An entity is not required to apply the Standard to borrowing costs directly attributable to the acquisition, construction or production of:

  1. (a)

    a qualifying asset measured at fair value, for example a biological asset within the scope of IAS 41 Agriculture; or

  2. (b)

    …

DEFINITIONS

…

7.Depending on the circumstances, any of the following may be qualifying assets:

  1. (a)

    …

  2. (e)

    investment properties

  3. (f)

    bearer plants.

IAS 36 Impairment of Assets

Paragraph 2 is amended.

SCOPE

2.This Standard shall be applied in accounting for the impairment of all assets, other than:

  1. (a)

    …

  2. (g)

    biological assets related to agricultural activity within the scope of IAS 41 Agriculture that are measured at fair value less costs of disposal;

  3. (h)

    …

IAS 40 Investment Property

Paragraphs 4 and 7 are amended.

SCOPE

…

4.This Standard does not apply to:

  1. (a)

    biological assets related to agricultural activity (see IAS 41 Agriculture and IAS 16 Property, Plant and Equipment); and

  2. (b)

    …

CLASSIFICATION OF PROPERTY AS INVESTMENT PROPERTY OR OWNER-OCCUPIED PROPERTY

…

7.

Investment property is held to earn rentals or for capital appreciation or both. Therefore, an investment property generates cash flows largely independently of the other assets held by an entity. This distinguishes investment property from owner-occupied property. The production or supply of goods or services (or the use of property for administrative purposes) generates cash flows that are attributable not only to property, but also to other assets used in the production or supply process. IAS 16 applies to owner-occupied property.