Accounting in Agriculture: Measurement practices of listed firms
biological assets, measurement, accounting choice, financial reporting, regulation
Based on the International Accounting Standard (IAS) 41 – Agriculture, this paper examines measurement practices of biological assets and their drivers, under accounting choice theory, given data from 2012. Taking into consideration 324 listed firms worldwide that have adopted International Financial Reporting Standards (IFRS) until 2011, the empirical evidence supports that while a large number of firms measures biological assets at fair value, there are others that refute the presumption of fair value reliability and measure biological assets at historical cost. The research model includes a binary dependent variable for the measurement practice (fair value or historical cost) and explores several factors that are expected to be related to the measurement of biological assets, namely, a country-level variable – legal status and firm-level variables – biological assets intensity, firm size, listing status, regulation expertise, potential growth, leverage and sector. It was found that the adoption of fair value measurement of biological assets is positively influenced by all variables, except by the negative impact of potential growth and by the absence of relationship with leverage. This paper seeks to help standard setters to better understand measurement practices, their drivers and constraints concerning biological assets, given the current discussion under the IAS 41.