Perceived Usefulness of Various Measurement Bases for the Valuation of Livestock in General Purpose Financial Reports

Abstract

At the present time there is no accounting standard in Australia governing the classification and valuation of livestock, although this topic is currently being addressed by the Australian Accounting Research Foundation, and a discussion paper on financial reporting for self-generating and regenerating assets has recently been released (Roberts et al, 1995). This research study identifies the most appropriate method for the valuation of livestock in the financial position segment of general purpose financial reports by analysing the requirements of Statement of Accounting Concepts No.2 "Objective of General Purpose Financial Reporting" (SAC2) and Statement of Accounting Concepts No.3 "Qualitative Characteristics of Financial Statements" (SAC3), and by testing the results of the above analysis against what users perceive to be the most useful for decision making. In Australia and overseas there has been considerable debate about livestock valuation, mostly from a management accounting viewpoint. However much of this debate is also relevant to financial reporting, and will be reviewed for this study. The study examines various valuation models in terms of both measurement theory and in terms of their perceived usefulness for the valuation of livestock.