Forum
« back to latest questions

Accounting treatment of forest trade

My company has bought a forest with US$100,000,000. The species of timber in the forest are some very rare types. The market price of the timber can hardly be measured. How will be the accounting treatment on this forest from year to year?

|
Ms.Wan
 

1 Answer

Your Answer:

Your Name:

1

According to Hong Kong Accounting Standard 41 – Agriculture, a biological asset should be measured at fair value. However, when fair value cannot be measured reliably, the biological asset shall be measured at its cost less any accumulated depreciation and any accumulated impairment losses. In your case, US$100,000,000 will be counted as the cost. The value of the forest will then be the cost less any accumulated depreciation and accumulated impairment losses.

|
Barry
CMS - web.calvin.hk