What occurs to agricultural produce upon harvesting according to IAS 41?

Agricultural produce, upon harvesting, is measured at fair value less costs to sell according to IAS 41, which specifically governs agriculture accounting standards. This treatment reflects the economic reality of agricultural businesses, where the value of the produce can be determined by market conditions at the point of harvest.

By valuing harvested produce at fair value less costs to sell, entities can recognize the produce's fair market value, ensuring that financial statements reflect the most relevant and up-to-date information about the assets held. This approach also recognizes that there are costs associated with selling the produce, and these costs are subtracted from the fair value to provide a more accurate assessment of its net realizable value.

This method aligns with the fair value measurement framework set out in other accounting standards, emphasizing the importance of market-based information and providing financial statement users with clearer insights into the performance and position of agricultural entities.