Annotation

The article supplies a review of the disadvantages on the benefits of fair value measurement of fixed operating assets for financial reporting. The fixed operating assets include capital non-financial assets such as property, plant and equipment, investment property, biological assets, and intangible assets – asset classes that agricultural enterprises typically use in their operation. Although being economically material, these assets have been sidelined in the current fair value debate that largely centers biological assets on agricultural enterprises. The value can apply to the subsequent measurement of these assets in two different models: under the fair value model, the asset is carried on the balance sheet at fair value, with periodic fair value changes recognized in profit or loss; under the revaluation model, which is used by Ukrainian enterprises, the asset is carried on the balance sheet at a revalued amount, the fair value at the date of the revaluation less any subsequent depreciation and impairment losses, with periodic fair value changes recognized in other comprehensive income and accumulated in a revaluation reserve within equity.

The list of transactions with fixed operating assets of agricultural enterprises, for which fair value measurement is required according to the requirements of the law, is defined.

It is substantiated that unobservable inputs shall be used to measure fair value of non-current operating assets enterprises as quoted market prices of an identical or a similar asset are usually not observing at the measurement date. The potential lack of verifiability limits usefulness of the fair value measurement.

Financial assets and others fixed operating assets differ in nature, with synergies potentially existing among items of property, plant and equipment and intangible assets, whereas such combinatory effects are unlikely to arise among financial assets. The presence of synergies raises the question whether the sum of fair values of individual operating assets appropriately represents the aggregate value of the operations they constitute. Therefore, despite its conceptual advantages, fair value is unlikely to become the primary valuation method for the fixed operational assets (except for the fixed biological assets) in agricultural enterprises on a voluntary basis.