Influential factors for the application of IAS 41 "agriculture" in portuguese wine companies

Abstract

The increasing relevance of fair value in comparison to historical cost, as a measurement criterion, placed it high on the agenda of the main accounting standard setting bodies in order to determine its usefulness and its adoption. In this way, the International Accounting standards Board (IASB) issued International Accounting standards (IAS) 41, which specifically addresses the fair value measurement of biological assets and agricultural goods. This paper focuses on the Portuguese wine industry. This specific industry was chosen due to its relevance when compared to other agricultural industries, within the Portuguese context. The impact and development of IAS 41 are analysed and particular emphasis in given to the perspective of some of the main players in the standard’s draft. The final part of this paper consist of an empirical study which is based on a questionnaire sent to a set of companies that are classified as falling under the wine industry (CAE 15931). In an empirical level, in order to understand which relevant factors in standard’s application are, we adopt the descriptive, factor, principal components, clusters and discriminant analysis. Although, the study’s limitations, we have analysed the results, which allowed us to conclude that the inquired gave more relevancy to the variables related to the applicability of the standard and the experience and knowledge of this and other standards, this is, they consider the applicability of the standard relevant for the sector.