Accounting for Bearer Plants: Illustrative Problem

RENATA DE COCO Corporation is engaged in the production of coconut water concentrate, virgin coconut oil, and coconut milk. On January 2, 2016, the entity purchase a 15-hectare coconut plantation in Davao City, Philippines. The costs associated with this acquisition are as follows:

It is expected that these coconut trees will provide fruits for 12 years. On the reporting date (December 31, 2016) the company conducted an assessment and found no any signs of deterioration in value.

How should the company account for the coconut trees applying the Amendments to IAS 41 Agriculture and IAS 16 Property Plant and Equipment on bearer plants during 2016?

Note: See the Next post for the complete solution and discussion. 

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