African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4046

Full Length Research Paper

Assessing the extent of compliance with IAS 41 by agricultural entities in Southern Malawi

Nelson Ndala
  • Nelson Ndala
  • Department of Business and Leadership, Faculty of Law and Management Studies, University of KwaZulu-Natal, South Africa.
  • Google Scholar


  •  Received: 31 July 2018
  •  Accepted: 06 September 2018
  •  Published: 14 October 2018

Abstract

The paper assesses the extent to which Malawian agricultural entities are complying with recognition and measurement requirements of IAS 41-Agriculture, for their agricultural produce and biological assets. The purpose of the paper is to investigate the extent to which Malawian agricultural entities are using the fair value accounting model proposed in IAS 41 for measuring their agricultural produce and biological assets; to establish the most common method utilized for measuring the agricultural produce and biological assets; and to identify the implementation challenges that agricultural entities face in complying with IAS 41, in particular, the determination of fair value. Questionnaires were used to collect the data. Thirty-two participants from Eastern Produce Malawi Limited and Sable Farming Limited participated in the research. Purposive sampling was used to identify the participants to the study. The findings indicate that most Malawian Agricultural entities recognize and measure their biological assets in accordance with IAS 41. However, there are challenges particularly with the determination of fair value. The findings indicate that most agricultural entities measure their agricultural produce and biological assets at fair value less estimated cost of sale at the point of harvest and fair value respectively. It was also established that present value of estimated future cash inflows is the most utilized method to determine the fair value of assets that are biological in nature.

 

Key words: Biological assets, fair value, recognition, agriculture produce, disclosure.