Abstract
Present study investigated the gap between accounting practices and the magnitude role of accounting information in the agricultural sector. Problem statement: Factors for this gap are: Current general accounting rules do not reflect the particularities of farming, the need of farm management, rural development and sustainability. The introduction of International Accounting Standard 41 (IAS 41) by International Accounting Standard Committee, Approach: With the Farm Accounting Data Network (FADN) in Europe, could be key elements to improve the use of agriculture accounting. Results: After mandatory and optional adoption for listed and non-listed small size companies, of IAS’s respectively, by EU at 2005, we conclude that the main contribution of IAS 41 is to provide a strong conceptual framework in agricultural accounting practice. Conclusion: FADN is an experienced data network, which could be a guide for implementing of IAS 41. Finally, we unfold IAS 41 statutory and FADN procedures grounding an informative frame for farm development policy.
Highlights
In spite of its relative importance in the Greek economy, agriculture does not receive as much attention from accounting researchers, practitioners and standard setters
The introduction of International Accounting Standard 41 (IAS 41) by International Accounting Standard Committee, Approach: With the Farm Accounting Data Network (FADN) in Europe, could be key elements to improve the use of agriculture accounting
After mandatory and optional adoption for listed and non-listed small size companies, of IAS’s respectively, by European Union (EU) at 2005, we conclude that the main contribution of IAS 41 is to provide a strong conceptual framework in agricultural accounting practice
Summary
In spite of its relative importance in the Greek economy, agriculture does not receive as much attention from accounting researchers, practitioners and standard setters. Farther to other types of information which are presented in physical measures only, the data collected by FADN refer to assets, liabilities, revenues and expenses of the farms in the sample and is depicted in reports similar to balance sheets and income statements. IAS 41 requires biological assets to be measured at fair value less estimated point-of sale-costs providing a superior conceptuality FADN seems to be in line with IAS 41 since market prices reflect a more realistic approach while indicate fair view. Further diversion between FADN and IAS 41 is that FADN uses year-end prices (through market prices) for both livestock and inventories granting a more practical approach while the valuation of ending inventories at fair value, at the point of harvest by IAS 41 introduces practical difficulties because of differentiation in harvest time of agriculture production and the related market price fluctuation (e.g., using FIFO). Overheads include machinery, building costs, contract work, energy and other direct inputs
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