44 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 3 MATERIAL ACCOUNTING POLICIES (CONTINUED) (m) Biological assets Oil Palm The Group attribute a fair value on the fresh fruit bunches (“FFB”) at each statement of financial position date as required under MFRS 141 “Agriculture”. FFB are produce of oil palm trees and are harvested continuously throughout the financial year to be used in the production of crude palm oil (“CPO”). Each FFB takes approximately 22 weeks from pollination to reach maximum oil content to be ready for harvesting. The value of each FFB at each point of the FFB production cycle will vary based on the cumulative oil content in each fruit. In determining the fair values of FFB, management has considered the oil content of all unripe FFB from the week after pollination to the week prior to harvest. As the oil content accrues exponentially in the 15 days prior to harvest, the FFB prior to 15 days before harvesting are excluded in the valuation as the fair values are considered negligible. The valuation model adopted by the Group is a discounted cash flows model which includes all cash inflows, cash outflows and imputed contributory asset charges where no actual cash flows associated with the use of assets essential to the agricultural activity are accounted for. The net present value of cash flows is then determined with reference to the market value of crude palm oil at the date of harvest, adjusted for freight, extraction rates, production, transportation, contributory asset charges and other cost to sell at the point of harvest. Dairy cows The fair value of dairy cows is determined based on income approach (Level 3 computation) for calves, computed using discounted cash flows model making reference on the assumptions of expected raw milk yield, raw milk price, mortality rate, feed cost, farm cost, contributory assets charges and other costs that will be incurred throughout the remaining periods up to its transformation into heifers. For heifers and mature dairy cows, the fair value are determined based on market approach (Level 2 computation), computed using recent market transactions, and adjusted accordingly to reflect the age, weight and body score. Cash crops Cash crops comprise pineapples, banana, and corn. Cash crops are measured at fair value less costs to sell. Any gains or losses arising from changes in the fair value less costs to sell are recognised in profit or loss. Fair value is determined based on the present value of expected output method and the estimated market price of the biological assets. Cash crops are classified as current and non-current assets based on the harvesting dates of the fruits. The Group’s growing or unharvested produce are measured at their fair value. The Group estimates the fair value of unharvested agricultural produce using estimated number of fruits to harvest and estimated future selling prices less current growing costs and estimated future growing costs.
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