Accounting for living and non-living resources mandatory from 1 April 2020

What’s new?

There are several new mandatory accounting requirements that are effective for financial years commencing on or after 1 April 2020. One of the new requirements is the accounting for living and non-living resources. [Note: The requirements for living and non-living resources are only mandatory for trading entities from 1 April 2021.]

The Standard of GRAP on Living and Non-living Resources (GRAP 110) provides guidance on the accounting for:

• Living resources, which are those resources that undergo a biological transformation. Examples include animals and plants that are used to provide services, and/or for research, conservation, recreation, and educational purposes.
• Non-living resources, which are those that are not living resources and that occur naturally and have not been extracted. Examples include water, minerals, oil, gas and other non-regenerative resources that have not been extracted. Extracted resources are accounted for using existing Standards of GRAP, including inventories.

The key accounting issue for living resources is whether an entity controls those resources. Control may be demonstrated if the entity intervenes to manage the physical condition of the resource, e.g. by intervening in its nutrition, health, reproduction, and environment; has the ability to restrict the movement of the resource, e.g. through the use of cages and enclosures; and/or has the ability to direct how the resource is used including its disposal. Where control exists and the other recognition criteria are met, the resource is recognised as an asset in the financial statements. The accounting requirements are similar to other assets. Certain disclosures are required even if the definition of an asset or the control criteria are not met.

Non-living resources are not controlled by entities and are therefore not recognised as assets in the financial statements. Entities are required to disclose information about certain aspects related to non-living resources in their financial statements.

Access the relevant documents

Entities should consult the following documents in preparing their financial statements in the new financial year:

• Directive 5 on Determining the GRAP Reporting Framework and related resources: Directive 5.
• Living and non-living resources: GRAP 110.
• FAQs: Link.

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