Companies whose activity is focused on production of biological assets (animals and/or living plants), have the obligation of measuring these assets in accordance with fair value minus sales expenses, at the end of each period of competence.
The norm that regulates this measurement is CPC 29.
The calculation of the fair value of a biological asset is complex and detailed. Each individual production unit (lot/block/patch, in the case of plants, individual/herd, in the case of animals) must be controlled individually and have its value calculated in accordance with the recipes and future costs expected up to the moment of realization of said receivables.
Evaluation of these assets is the result, among other factors, of end-product market prices, which, in general, tend to be very volatile. It is essential for the evaluator to understand the effects of this volatility in the value of the asset as a whole, starting from trustworthy information sources.
At SETAPE, we are trained and have significant experience in biological asset evaluation projects.