Forest Industry: Application Review of IAS 41

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The application of fair value to standing timber requires considerable judgment, and the presentation of this valuation is of growing interest. There are major questions as to how the standard is being applied to forest assets.

In 2009, we published a study on how fair value was being applied by forest owning companies applying IFRS. In this 2011 study, based on 2009-10 financial statements, we review how fair value is being applied by companies included in the 2009 study, and by early adopters in regions now migrating to IFRS.

The update study had three key objectives in focus, on which to gain insight:

1. Has there been any change in the application of the valuation methods or factors used in the cash flow model since our 2009 study?
2. Are there significant differences in the value of standing timber among the companies?
3. Is there a noticeable difference (i.e. positive or negative development) in the quality of the information disclosed on the value of standing timber?