ASC 360-905
Agriculture
360 Property, Plant, and Equipment
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ASC 360-905 governs how agricultural producers account for property, plant, and equipment — land development, orchards/groves/vineyards, intermediate-life plants, and animals. The core rule is that development costs (permanent and limited-life land development, cultural costs of trees and vines, and direct and indirect costs of developing animals) are capitalized during the development period; permanent land development is never depreciated because it has an indefinite life, while limited-life development, plantings, and mature breeding/production animals are depreciated over estimated useful or productive lives beginning when commercial production or maturity is reached.
Key points (7)
- Permanent land development costs (clearing, initial leveling, terracing, earthen dams) shall be capitalized (360-905-25-1) and shall not be depreciated or amortized because they have an indefinite useful life (360-905-35-6).
- Limited-life land development costs and the direct and indirect development costs of orchards, groves, vineyards, and intermediate-life plants shall be capitalized during the development period (360-905-25-3) and depreciated over the useful life of the land development or of the tree, vine, or plant (360-905-35-7).
- Cultural costs during the development of trees and vines (stakes and wires, grafting, labor for pruning and forming) are capitalized, and net proceeds from sales of products before commercial production begins are applied against the capitalized cost of the plants, trees, or vines (360-905-25-2).
- Breeding animals, all livestock, and production animals are recognized as fixed assets, except animals with short productive lives classified as inventory under 905-330-25-3 (360-905-25-4).
- All direct and indirect development costs of animals are accumulated until maturity and transfer to a productive function; immature animals are not considered in service, and upon maturity accumulated costs less estimated salvage value are depreciated over estimated productive lives (360-905-30-1; 360-905-35-2).
- Animals available and held for sale are measured under Subtopic 330-10 or, per established industry practice, at net realizable value if there are reliable, readily determinable, realizable market prices, insignificant and predictable disposal costs, and immediate availability for delivery (360-905-30-2).
- Depreciation of orchard, vineyard, grove, and intermediate-life plant costs begins when production in commercial quantities begins (360-905-35-4; 360-905-35-5), and accumulated costs and estimated useful lives for intermediate-life plants must be disclosed (360-905-50-1).
For students. The exam trap is the line between capitalized development costs (PP&E under 360-905) and inventoriable growing-crop costs (905-330), and the fact that permanent land development is capitalized but never depreciated. Also remember depreciation does not start until commercial production or animal maturity, and pre-production sales proceeds reduce the capitalized cost rather than being reported as revenue.
development period costspermanent land developmentlimited-life land developmentintermediate-life plantsbreeding and production animalscommercial production thresholdnet realizable value for animals held for salesalvage value and depreciable base
Machine-generated study aid for ASC 360-905. Check the source paragraphs below.
360-905-00Status
Source downloaded: .Record version b15c251c5a9d. Effective date must be checked in the source.
360-905-00-1
The following table identifies the changes made to this Subtopic.
| Paragraph | Action | Accounting Standards Update | Date |
| Land Development Costs | Added | Accounting Standards Update No. 2014-06 | 03/14/2014 |
| Land Improvement Costs | Superseded | Accounting Standards Update No. 2014-06 | 03/14/2014 |
| Limited Life Land Development Costs | Amended | Accounting Standards Update No. 2014-06 | 03/14/2014 |
| Permanent Land Development Costs | Amended | Accounting Standards Update No. 2014-06 | 03/14/2014 |
| Net Realizable Value | Added | Accounting Standards Update No. 2015-11 | 07/22/2015 |
| 905-360-30-1 | Amended | Accounting Standards Update No. 2015-11 | 07/22/2015 |
| 905-360-30-2 | Amended | Accounting Standards Update No. 2015-11 | 07/22/2015 |
360-905-05Overview and Background
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360-905-05-1
This Subtopic addresses accounting for property, plant, and equipment for entities in the agricultural industry.
360-905-05-2
Development costs of land, trees and vines, intermediate-life plants, and animals incurred by agricultural producers are different from inventoriable costs incurred in raising crops for harvest (see Subtopic 905-330).
360-905-05-3
Land development generally includes improvements to bring the land into a suitable condition for general agricultural use and to maintain its productive condition. Some improvements are permanent; some have a limited life. Permanent land developments include, for example, clearing, initial leveling, terracing, and construction of earthen dams; they involve changes to the grade and contour of the ground and generally have an indefinite life if they are properly maintained. Limited-life developments usually include such items as water distribution systems and fencing and may also include the costs of wells, levees, ponds, drain tile, and ditches, depending on the climate, topography, soil conditions, and farming practices in the area.
360-905-05-4
Orchards, vineyards, and groves generally develop over several years before they reach commercial production. Production continues for varying numbers of years, depending on such influences as type of plant, soil, and climate. During development, the plants normally require grafting, pruning, spraying, cultivation, or other care.
360-905-05-5
Intermediate-life plants include, for example, artichokes, various types of berries, asparagus, alfalfa, and grazing grasses. Development costs of intermediate-life plants include the cost of land preparation, plants, and cultural care until the plant, bush, or vine begins to produce in commercial quantities.
360-905-05-6
The terms livestock and animals are used interchangeably and are meant to include cattle, sheep, hogs, horses, poultry, and other small animals. The development of animals requires care and maintenance of the breeding stock and their progeny until their transfer from the brood herd. Animals purchased before maturity also require care and maintenance to ready them for productive use or sale. The animals are ultimately identified for transfer to breeding herds, dairy herds, or other productive functions, are selected for sale, or are transferred to a feeding or other marketing operation.
360-905-05-7
In some agricultural operations a field or row crop is raised for use in the development of another product, such as grain or hay used by the producer to feed livestock.
360-905-05-8
See also Section 905-10-05 for further background.
360-905-15Scope and Scope Exceptions
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Overall Guidance
360-905-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see the General Subsection of Section 905-10-15.
360-905-25Recognition
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Permanent Land Development Costs
360-905-25-1
Permanent land development costs shall be capitalized.
Trees and Vines
360-905-25-2
Trees and vines may be planted and brought to production by the producer or on a contract basis. The young trees and vines are usually purchased as nursery stock and transplanted into the orchard or vineyard in the desired pattern. Cultural costs during the development period, including stakes and wires, grafting, and labor for pruning and forming, shall be capitalized. Net proceeds from sales of products before commercial production begins shall be applied to the capitalized cost of the plants, trees, or vines.
Development Costs of Land, Orchards, Groves, Vineyards, and Intermediate-Life Plants
360-905-25-3
Limited-life land development costs and direct and indirect development costs of orchards, groves, vineyards, and intermediate-life plants shall be capitalized during the development period.
Breeding and Production Animals
360-905-25-4
Except for animals with short productive lives classified as inventory under paragraph 905-330-25-3all of the following shall be recognized as fixed assets:
- aBreeding animals
- bAll livestock (which includes cattle, hogs, sheep, and goats)
- cProduction animals.
Field or Row Crops
360-905-25-5
The costs involved in the production of the field or row crops for the producer's own use shall be identified as part of the maintenance costs of the livestock and accounted for in the same manner as other maintenance costs.
360-905-30Initial Measurement
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Developing Animals
360-905-30-1
All direct and indirect costs of developing animals shall be accumulated until the animals reach maturity and are transferred to a productive function. All direct and indirect development costs of animals raised for sale shall be accumulated, and the animals shall be accounted for in accordance with the measurement guidance in Subtopic 330-10 until they are available for sale.
Animals Available and Held for Sale
360-905-30-2
Agricultural producers shall report animals available and held for sale either:
- aIn accordance with the measurement guidance in Subtopic 330-10
- bIn accordance with established industry practice at net realizable value if all of the following conditions exist:
- 1There are reliable, readily determinable, and realizable market prices for the animals.
- 2The costs of disposal are relatively insignificant and predictable.
- 3The animals are available for immediate delivery.
- 1
360-905-30-3
The costs of raised or purchased animals kept in grazing areas or open ranges shall be determined in the same manner as for breeding animals.
Production Animals
360-905-30-4
The production costs of chickens raised for an egg-laying unit shall include the initial cost of the birds (or, if hatched, the costs of eggs and hatching expenses), the costs of materials and labor, and allocated indirect costs during the prematurity period.
360-905-30-5
Some production animals produce more than one product. For example, sheep produce lambs, wool, and meat; dairy cattle produce milk, calves, and meat. The primary products are lambs and milk, whereas the secondary products are usually wool and calves. Costs may be allocated as either joint products or by-products depending on the estimated relative values of each. In most instances the meat, or slaughter value, of the production animal is considered salvage. The method of accounting shall be determined by the amounts anticipated to be received for each product. Those amounts are affected by the breeding, production, and marketing practices of the producer.
360-905-35Subsequent Measurement
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Breeding and Production Animals
360-905-35-1
Fixed assets recognized under paragraph 905-360-25-4 shall be depreciated over their useful lives.
360-905-35-2
At the point that breeding and production animals reach maturity and are transferred to a production function, the accumulated development costs recognized under paragraph 905-360-25-4, less any estimated salvage value, shall be depreciated over the animals' estimated productive lives. Immature animals shall not be considered to be in service until they reach maturity, at which time their accumulated costs recognized under paragraph 905-360-25-4 shall become subject to depreciation.
360-905-35-3
The production costs recognized under paragraph 905-360-25-4 of chickens raised for an egg-laying unit, less estimated salvage value of the chickens, shall be amortized over the egg-laying period.
Trees and Vines
Intermediate-Life Plants
360-905-35-5
When production in commercial quantities begins for intermediate-life plants, the capitalized costs shall be depreciated over the estimated productive life of the plantings. Regional differences, climate and soil conditions, and cultural practices may affect the productive capacity and life of intermediate-life plants and shall be considered when establishing depreciable lives.
Permanent Land Development Costs
360-905-35-6
Permanent land development costs capitalized under paragraph 905-360-25-1 shall not be depreciated or amortized, since they have, by definition, an indefinite useful life.
Development Costs for Limited-Life Land Development, Orchards, Groves, Vineyards, and Intermediate-life Plants
360-905-35-7
Costs capitalized during the development period under paragraph 905-360-25-3 shall be depreciated over the estimated useful life of the land development or that of the tree, vine or plant.
360-905-50Disclosure
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Intermediate-life Plants
360-905-50-1
Financial statement disclosure of the accumulated costs for intermediate-life plants and estimated useful lives shall be made.