Measurement
Plants and Produce:
IFRS guidance states that plants should be measured on initial recognition and at the end of each reporting period at their fair value less costs to sell. Buds shall be measured at their fair value less costs to sell at the point of harvest. The guidance further instructs that it may be useful for plants or buds to be grouped according to significant attributes, for example, by age or quality.
In practice, we have grouped together plants based on a combination of age and quality, and buds on quality (strain) alone. Our guidance assumes that a fair value can be established as the supply of cannabis plants could surely facilitate a sale, and that buds have easily attainable market prices.
For plants, we recommend that they are grouped by age and quality and valued at the market-selling price less incremental costs directly attributable to the disposal of the plant (excluding finance costs and income taxes).
For buds, we recommend that they are grouped by quality and valued at the market selling rate per gram per group of similar buds less incremental costs directly attributable to the sale of the buds (excluding finance costs and income taxes).
Product:
For product, we look to IAS 2 Inventories for guidance on measurement. It states that product should be valued at the lesser of cost (including cost of the product, taxes, transport, handling and all costs to reasonably bring the inventory to its present location and condition), and net realizable value (selling price less costs to sell).
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