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International developments are set to reignite the controversy over how self-- generating and regenerating assets (SGARAs) are measured. The International Accounting Standards Committee is working on an international accounting standard on agriculture due to be effective some time after 1 January 2002. The standard is expected to be similar to AASB 1037 Self-Generating and Regenerating Assets. This is an interesting development since the Australian Accounting Standards Board was urged to not move ahead of international developments when it released Exposure Draft 83 Self-- Generating and Regenerating Assets in 1997. This paper surveys Australian SGARA measurement practices to assess the extent of reporting change required by AASB 1037 and its international counterpart.
Australia is the only country to have prescribed formally how self-generating and regenerating assets (SGARAs) should be measured in financial statements. For periods ending on or after 30 June 2001, Australian reporting entities complying with AASB 1037 will report their SGARAs at net market value. While the evolution of AASB 1037 1 was long and controversial, the debate surrounding the measurement method continued after the standard's gazettal. At that stage, firms advised the AASB that they were "encountering practical implementation problems in adopting AASB 1037 for the financial year ending on 30 June 2000" (AASB 1037A, p. 7). In July 1999, the AASB responded and delayed the application date of AASB 1037 by one year (AASB 1037A, para. 3.1(a)). The extension was granted on the grounds that it would enable firms to develop systems capable of providing reliable information about the net market value of their SGARAs.
Combined, the lobbyists' arguments and the AASB deferral of the application date imply that it is perceived that many firms need additional time to implement systems to be able to report SGARAs at net market value. Prior research supports this conclusion.2 However, because there is no known research documenting how firms from a broad cross-section of industries measure SGARAs, the impact of AASB 1037 on firms' current reporting practices is not clear. To fill this void and provide an understanding of how firms are valuing SGARAs, we document the SGARA measurement methods that were disclosed in a crosssection of Australian firms' 1999 annual reports. Our findings indicate that although some firms measured SGARAs at net market...