Accounting Theory And Current Issues For Bio Sustainable Feed Ltd

Nature and the Value to Society

Discuss about theq Accounting Theory and Current Issues for Bio Sustainable Feed Ltd.

The Bio Sustainable Feed (BSF) Ltd is an Australian based bio research company, listed in ASX, the stock exchange of Australia. For last two decades the firm is engaged in making the plant based fish feed in sustainable aqua culture feed. But as the plant based feed as a research result of the company comes in the market, there were some drawbacks identified by the Environmentalist and the research failed. It was seen that the growth of the fish is remarkably slow mainly for the sea fishes. The reason for this was analysed and found that those fishes are basically small fish eaters like tuna, salmon etc. and the plant based feed is not working on them properly. Also the fatty acid which is good for health for human heart was less in quantity. Already the research cost of 360 million AUD was lost. 

CBC also asserts that the conversion ratio is very poor. It is also observed that the plant based feed is not resolving the problem and one third fish have died but the growing time is almost double plus the mature fishes were small in size. Environmentalist protests that the human quality foods are being used for luxury fishes which are leading towards poor low value fish production. This may be a reason for malnutrition. The firm got some subsides for doing the research work to develop an alternative aquaculture feed from research (Mediacongo, 2015). 

The BSF ltd is a bio-research firm, and the main objective of BSF is to produce high quality fish feeds for the society. They decided to transform the oil based and meat based food to vegetable food for fishes. The vegetable feeds consist of fruit, beans nuts whole grains etc. but the problem arises in different way. The vegetable feeds were not suitable for the sea fishes or big fishes as they mainly eat the small fishes, and meat. The impact on them was bad, the growth reduces, almost one third fishes died in recent years. As a result the quantity of fatty acid reduces.  It is also researching on the bacteria-based feeds and they are trying to find out the fish feeds, out of sugarcane residue, wood chips extra. The firm is trying to find out the alternative way to make the fish feeds from the bio research for last two decades. They shifted to plant based fish feeds which can affect health and eating the seafood will be safer and healthy. 

Early Problems

There are lots of funding received by the firm to accomplish the research work, as the work recycles the natural sources and the possibility of harmful substances reduces in the food. The animals as well as the human are getting the proper food value and proper nutrition from the resource. As the aquaculture rapidly growing in every nation the contribution of aquaculture to the fisheries is also expanding rapidly. The research focuses on the reformulation of diets for Nile tilapia, arguably the second highest firmed food in the world. The research led towards the plant based feeds for the fishes is not only diet and nutritious food for fishes but also it provides the proper food value to the human who consumes the food. The ingredients are extracted from canola, soy corn, nuts etc. The 24% of fish feed was made in 2000 and it is expected that the figure will reach to 7% in 2020.  Research shows that the fish feed, if replaced by the locally grown plants and planktons, the growth of fish is remarkable and it reduces the death rate of the fishes also. It increases the food value of the fish. The aquaculture environment may now include the nutrient to the food and pesticides runoff (Fry, 2015).

The research was based on plant based food for the fishes, food ingredients are from plants like sunflower soya bean etc. The problem begins when the big fishes failed to survive on that. At that time already 120 million wasted. The big fishes are those fishes which eat the other fishes like Tuna, salmon etc. As most of our favourite seafood is carnivorous and we have to feed them the fishmeal, the plant based meal will not work for them. In the year 2016 when CBC found the plant based feed is not resolving the issues, rather the growing time of the fishes became almost doubled, mature fishes look smaller than the normal size. Fish farming has become very popular now a days and the sector is growing rapidly outpacing the diary and beef industry. So at this time this sifting of food habit was very essential. With the usage of the plant based food, the conversion ratio was not improved as it was expected. These failure was compounded by the environmentalist as they said this shift could impact on health issues as well as the environmental effect on the seafood. As we get the Omega 3 fatty acid from the sea food which will reduce our heart problem. The research says that the usage of plant based feed will reduce the fatty acid quantity from the sea fish, which can affect the human health.  Before using the plant based feed the fish farming industry should evaluate and analyse the environmental as well as the human health impact. (Emily, 2016)

Research and Development

The research and development is the primary phase of one product life cycle. The R & D is basically an investment activity; the outcome is an intangible asset. The development  of the entire process of designing the product, marketing and catering the product, BSF has designed, planned the product, way of collecting the plant feed  and how to market the products, whom to sale. On the other hand I would say research is the continuous process, the research and more research make the products more innovative and research work can fix the existing issues (Jantzen, 2013). 

Here product was initially launched for the fishes and the outcome of the research showed the findings like the sea fishes are not growing that much, the fatty acid contents becomes drastically low, now further research is required to overcome these issues. The research is a continuous process for the company. As the fishing firming or the aquaculture is rapidly growing all over the world, everyday there will be new challenges to face and the duty of the research team will be to fix the issues. Companies funded more when the existing product becomes outdated or the competitors come with superior quality. Sometimes product development is a whole thing from designing to selling. As the first step of developing a product, every company should have the R & D department and invest more on this to upgrade the R & D. the desired outcome is also a new innovation. Innovation is co related with R & D, the new development, design, the application is innovation. Initially when the BSF’s plant based feed failed to thrive, the company research on that to find out the solution, use of bacteria based food which will be produced from wood chips, methane gas, sugarcane residue etc. and to some extent the research was successful (Lothe, 2013).

Patent is related to the intellectual property, it is the creation of mind. This patent is very important for pharmacy companies. It was expected the market value patent would be around $700 million AUD, this is mainly the cost for research and developing the product. Patents are the exclusive rights of a company. The patent is the asset for a company, as long as the patents are there, company gets the royalty on that.  Fair market value of any asset is the cost of the asset in the open market. Fair market value patent is the value of the patent in the open market. As the patent is the intellectual property, the property in an intangible asset for the company. The calculation of patent is not fixed and it depends on the type of patent as well as the open market condition. As the bacteria based feed is a remarkable innovation and the usage of this product will change the feeding process of the fishes and the sea fishes, as well as this will be beneficial for the eco system and human health, the acceptability as well as the necessity creates a huge demand in all over the world.  (Backman, Maurie, 2016).

Market Value Patent

It is assumed that the product will be acceptable & will give the satisfactory result as it is beneficial for human as well as fish.

Date	Particulars	Debit ( in AUD)	Credit( in AUD)
09.07.2013	Bank A/c  debit	500 million
	CSIRO grant a/c Credit		500 million
	Being grant received from CSIRO
12.09.2014	Research a/c  debit	140 million
	Bank A/c Credit		140 million
	Being expenses incurred in research
15.10.2014	Fixed Assets a/c debit	50 million
	Research a/c  credit		50 million
	Being fixed assets procured for research
22.09.2015	Research a/c  debit	180 million
	Bank A/c Credit		180 million
	Being expenses incurred in research
10.02.2016	Research a/c  debit	180 million
	Bank A/c Credit		180 million
	Being expenses incurred in research
19.04.2016	Development a/c  debit	100 million
	Bank A/c  credit		100 million
	Being expenses incurred in development

Justification of CSIRO grant and R & D expenses of BSF Ltd:-

1. Grant account deposited in bank on 9^th July, 2013- As per grant from CSIRO
2. First instalment on research expense had been allocated on 12.09.14- As per the condition laid by CSIRO.
3. Procurement of fixed assets for research purpose had been done on 15.10.14-As per requirement of the research process.
4. Second instalment of research expense had been allocated on 22.09.2015- As per the condition laid by CSIRO.
5. Third instalment if research expense had been allocated on 10.02.2016- As per the condition laid by CSIRO.
6. The expense on development had been spent on 19.04.2016- As per decision of BSF management.

With the rapid growth of the aquaculture industry, the researchers invented the plant base food for the fishes. The plant based food soon replaces the normal organic food of the fishes but recently new research has come up with the findings that the plant based food may affect the human health as well as that can slow down the growth of fish. BSF’s researchers were trying to find out the new resources and they had invented the bacteria based food which will be brought from wood chips, sugarcane residuals, methane gas etc. Really it is a remarkable invention also. They have received the grant to do the R & D from CSIRO, the scientist of this organisation spent long 10 years for development the feed activities. Turning meat eating fish to vegetarian diet was a challenge almost all over the world. The research is going on as research found that due to the deficiency of omega 3 in fish eating fish may cause a bad health for human as well as on the growth of the fish, research shows that the fish’s reproduction capability has dropped down and the matured fish is not grown as expected. These failures were compounded by the environmentalist as they said this conversion could impact on health issues as well as the environmental effect on the seafood.  We get the Omega 3 fatty acid from the sea food which will reduce our heart problem. The patent is the intellectual property thus the property in an in tangible asset for the company (Mediacongo, 2015). 

The calculation of patent is not fixed. It depends on the type of patent as well as the open market condition. The BSF asserted the patent value as $700 million AUD if it is sold in two years and $200 million if it is sold in ten years (Ft, 2016).

To support this there are few organisations that have supported the company to carry the research work, as the research is a continuous process and the inflow of the fund is very important. Companies funded more when the existing product becomes outdated or the competitors come with superior quality. Sometimes product development is a whole thing from designing to selling. The value of patent depends on the intellectual property. In the case BSF planning to coming out with new bacteria based feed which will be made from wood chips, methane gas, sugarcane residue etc. which is exclusive as well as the product will be unique because of one research and development of such product. The appropriate discounted rate is 8% Per Annum  (Capitalcube, 2016).

References:

Backman, Maurie, 2016. How Is the Fair Market Value of Stock Determined? [Online] Available at: https://www.fool.com/knowledge-center/how-is-the-fair-market-value-of-stock-determined.aspx [Accessed 25 September 2016].

Capitalcube, 2016. Patties Foods Ltd. – Value Analysis (ASX:PFL) : January 22, 2016. [Online] Available at: https://www.capitalcube.com/blog/index.php/patties-foods-ltd-value-analysis-asxpfl-january-22-2016/ [Accessed 19 September 2016].

Emily, 2016. Giving farmed fish plant-based food comes with complications. [Online] Available at: https://marinesciencetoday.com/2016/03/23/plant-based-aquaculture-complications/ [Accessed 25 September 2016].

Fry, J., 2015. Shift in farmed fish feed may affect nutritional benefits of eating seafood. [Online] Available at: https://hub.jhu.edu/2016/03/14/changing-fish-feed-nutritional-benefits-omega-3/ [Accessed 25 September 2016].

Ft, 2016. Patties Foods Ltd. [Online] Available at: https://markets.ft.com/data/equities/tearsheet/financials?s=PFL:ASX [Accessed 19 September 2016].

Chen, J.M.R., n.d. https://www.journals.elsevier.com/food-bioscience. [Online].

Jantzen, L., 2010. https://sciencenordic.com/search/apachesolr_search/fish. [Online].

Jantzen, L., 2013. Fight fish disease with fish. [Online] Available at: https://sciencenordic.com/fight-fish-disease-fish [Accessed 25 September 2016].

Lothe, R., 2013. Fish feed-research may help reduce world hunger. [Online] Available at: https://sciencenordic.com/fish-feed-research-may-help-reduce-world-hunger [Accessed 25 September 2016].

Mediacongo, 2015. ToR Audit BSF-IA Final. [Online] Available at: www.mediacongo.net/docs/jobaof/2015/wv_tdr_anglais_20150418.docx [Accessed 17 September 2016].