IS ACCOUNTING FOR AGRICULTURAL ASSET APPLICABLE IN INDONESIA?

Abstract

The study aimed to discuss underlying reason why the national agricultural industry, dominated by small and middle sector, did not establish a standardized accounting for agricultural assets instead of adopting IASB accounting system. This new standard would become a better fit for the culture and characteristics of the national agricultural sector. The study used critical paradigm because until recently Indonesia has not adopted IAS 41 yet and as the consequence, there was not any document that recorded biological assets of the livestock industry comprehensively. As an agraris country, Indonesia should establish standardized accounting system for agricultural asset. The finding showed that the national agricultural asset was regulated in an accounting standard that had worked effectively since January 1, 2018. This standardized accounting system adopted IAS 41 accounting system. However, IAS 41 only worked for large-scale agricultural industry and did not work as effectively for the small and middle-scale agricultural industry Indonesia had. The major obstacle was to establish fair value, more particularly one for reliable measurement. Establishment and adoption of standardized accounting system should take local culture and wisdom into account. It is expected that the National Standard Establishment Board's idea to adopt IAS 41 does not lead to new capitalism since evidence showed potentials for nepotism between actors of the agricultural industry. PU - Russian Journal of Agricultural and Socio-Economic Sciences PA - Orel City