Hi Everyone, when starting a fish farm from Zero, and purchasing the juveniles, let's say month 3, should I account as a gain arising from changes in fair value of biological assets, the total value of the juvenile + the feed consumed that month+direct costs? If I do that, since I still don't have sales and my OPEX still are low, I will have a profit and income tax for a "fake income"? I do not know how to figure out this. Thanks a lot!
Accounting biological assets
Answers
I would recommend checking IAS 41:
https://www.iasplus.com/en/standards/ias/ias41
I have experience in tree farming, where the trees are just the inventory and will be sold at some point of their growth cycle (no fair value issue), but I can see why fish farming might need a fair value increase just like any other live stock I presume.
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Accounting