Some commentators on Exposure Draft, E65, expressed significant concern about the reliability of fair value measurement for some biological assets. They argued that active markets do not exist for some biological assets, in particular for those with a long growth period. They also argued that present value of expected net cash flows is often an unreliable measure of fair value due to the need for, and use of, subjective assumptions. The Board decided that there was a need to include a reliability exception for cases where market-determined prices or values are not available and alternative estimates of fair value are determined to be clearly unreliable. The Standard is effective for annual financial statements covering periods beginning on or after 1 January 2003.
Earlier application is encouraged.