A Comparative Study of Difficulties in Accounting Preparation and Judgement in Agriculture Using Fair Value and Historical Cost for Biological Assets Valuation

Estudio Comparativo de Las Dificultades Para La Realización de La Contabilidad y La Interpretación de La Información En La Agricultura Aplicando Coste Histórico y Valor Razonable En La Valoración de Los Activos Biológicos

Authors

DOI: https://doi.org/10.1016/S1138-4891(12)70040-7
Keywords: valor razonable, coste histórico, activos biológicos, contabilidad agrícola, agricultura

Abstract

This paper presents empirical research comparing the accounting difficulties that arise from the use of two valuation methods for biological assets, fair value (FV) and historical cost (HC) accounting, in the agricultural sector. It also compares how reliable each valuation method is in the decision-making process of agents within the sector. By conducting an experiment with students, farmers, and accountants operating in the agricultural sector, we find that they have more difficulties, make larger miscalculations and make poorer judgements with HC accounting than with FV accounting. In-depth interviews uncover flawed accounting practices in the agricultural sector in Spain in order to meet HC accounting requirements. Given the complexities of cost calculation for biological assets and the predominance of small family business units in advanced Western countries, the study concludes that accounting can be more easily applied in the agricultural sector under FV than HC accounting, and that HC conveys a less accurate grasp of the real situation of a farm.

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Author Biographies

Josep M. Argilés-Bosch

Tenuredlecturer

Av. Diagonal, 696, planta 3
Barcelona
Barcelona
8034
SPAIN

Anna Sabata Aliberch

 

 

Josep Garcia-Blandon

Professor

Via Augusta, 390
Barcelona
8017
SPAIN

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Published
01-01-2012
How to Cite
Argilés-Bosch, J., Sabata Aliberch, A., & Garcia-Blandon, J. (2012). A Comparative Study of Difficulties in Accounting Preparation and Judgement in Agriculture Using Fair Value and Historical Cost for Biological Assets Valuation: Estudio Comparativo de Las Dificultades Para La Realización de La Contabilidad y La Interpretación de La Información En La Agricultura Aplicando Coste Histórico y Valor Razonable En La Valoración de Los Activos Biológicos. Revista De Contabilidad - Spanish Accounting Review, 15(1), 109–142. https://doi.org/10.1016/S1138-4891(12)70040-7
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