What are Intermediate-Life Plants?

Intermediate-life plants are plants that have a growth and production cycle exceeding one year, but less than those of trees and vines. Examples are artichokes, asparagus, and grazing grasses. During their development, a farmer may engage in land preparation, plant purchases, and cultural care. Development costs should be accumulated until production begins in commercial quantities. At that point, you should depreciate the costs over the estimated useful life of the plantings. The useful life chosen for depreciation may vary, depending on regional differences and other factors.

The cost of intermediate-life plants is reported on the balance sheet as a non-current asset. Since this cost is classified as non-current, it is positioned lower down on the balance sheet, after all current assets but before current liabilities.

Disclosure of Intermediate-Life Plants

A farm should disclose in the footnotes attached to the financial statements the accumulated costs for intermediate-life plants, as well as their estimated useful lives. A sample disclosure is noted below.

Note X – Intermediate-Life Plants

Intermediate-life plants include plantings that have a productive life of more than one year but are not classified as long-term bearer plants. These typically include crops such as grapevines, blueberry bushes, and other perennial plants with a limited productive lifespan.

As of December 31, 20XX, the farm has capitalized accumulated costs related to intermediate-life plants totaling $350,000. These costs primarily include land preparation, planting, fertilization, and maintenance incurred prior to the plants reaching commercial production.

The estimated useful lives of intermediate-life plants range from 5 to 15 years, depending on the crop type and management practices. Depreciation is recorded using the straight-line method over the estimated useful life of each planting, beginning when the plants become commercially productive.

The farm reviews the carrying value of these assets periodically to assess recoverability and adjusts for any impairment, if necessary.