Derecognition of Aged Bearer Plant (End of Productive Life — Replanting)
Removing an exhausted bearer plant from the balance sheet at the end of its productive life — recognizing any residual carrying amount as a loss — in preparation for replanting.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Loss on Derecognition — Bearer Plant | Expense (+) | 1,200.00 | - |
| Accumulated Depreciation — Bearer Plants | Contra-Asset (-) | 8,800.00 | - |
| Bearer Plants — Mature (Cost) | Asset (-) | - | 10,000.00 |
💡 Accountant's Note
At the end of a bearer plant's productive life (e.g., after 20 years an orange grove no longer produces economically), the plant is uprooted and the asset is derecognized under IAS 16 para 67. The accounting removes both the gross cost and accumulated depreciation. If the carrying amount is not fully depreciated to zero (residual book value remains), the difference is a loss on derecognition recognized in profit or loss. Proceeds from salvage (sale of timber from old trees, for example) would offset the loss. Replanting costs for the replacement orchard begin a new capitalization cycle as a new immature bearer plant asset.
Practitioner & Systems Framework
💻 ERP Architecture
Retire the old asset record completely in the fixed asset module. Initiate a new asset record for the replanting project immediately. Document the economic decision to replant (agronomist's report on yield decline).
⚠️ Audit Flags
Was derecognition timely? Continuing to carry fully exhausted bearer plants on the balance sheet without impairment testing is a common error. Auditors also verify that replanting costs are correctly capitalized, not expensed.
📄 Required Documentation
Yield data showing productive decline, board/management decision to replant, fixed asset retirement documentation, salvage proceeds records, and new planting cost schedule.
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