The link between accounting measures of biological assets and financial standing of the agricultural enterprises : evidence from Lithuania

The purpose of the research is to assess the impact of the choice of biological asset measuring method on the financial standing, overall performance, and financial attractiveness of the agricultural enterprises. The analysis of scientific research studies shows that there is no preference given for one of the methods in the measurement of biological assets—cost or fair value less estimated costs to sell. The advantages and disadvantages of both methods are disclosed in this research. The case study is based on analytical data of agricultural enterprises, which are specializing in livestock farming and applies cost method to measure biological assets. The impact of the change in the measuring method on key financial ratios was calculated. Financial performance improves when using the fair value method compared to the cost method. However, a risk of violation of the principles of prudence and neutrality was noted. For this reason, the conclusion was made that the cost method is more relevant for measuring biological assets.