Fair Value and Financial Performance of Agricultural Enterprises: Challenges and Implications of Its Application
Fair Value and Financial Performance of Agricultural Enterprises: Challenges and Implications of Its Application

Summary/Abstract: Financial reporting by agricultural enterprises aims to provide an objective representation of their financial position and earning capacity, primarily to protect their interests and meet the information needs of potential investors. Given that historical cost accounting does not ensure sufficient transparency in financial reporting, fair value accounting has been introduced into the regulatory framework, placing emphasis on the measurement of net assets, assets, and liabilities at fair value. This study examines the specific characteristics of measuring biological assets from the perspective of the application of International Accounting Standards. Based on the research conducted, the authors highlight the challenges associated with measuring biological assets under the fair value concept, particularly due to the need to adjust their carrying amounts at initial recognition and at the end of the reporting period. However, the application of the fair value concept still does not fully resolve the issue of high-quality financial reporting because of subjectivity and the potential for manipulation, which may result in an unrealistic presentation of financial performance. The research was conducted using descriptive statistics and financial analysis based on publicly available data. Finally, the results indicate that more effective management measures are required to increase returns on capital and enhance the market value of enterprises operating in the agricultural sector.

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