Ann: Half Yearly Report and Accounts, page-24

Also my understanding. Not an accountant but educated myself by reading analyst reports of Canadian cannabis companies who must also apply the same accounting standard.

Without biological assets COGS would be overstated by an amount equal to the costs associated with plants still growing. This can be a tricky concept for investors to get their heads around as most are used to COGS representing exactly what is stands for - Cost of Goods Sold. Tell them it also includes costs for goods not sold and it all gets a bit confusing.

Biological assets is an estimate provided by management based on their calculations and there are checks and balances to ensure it is accurate. If they overstate income in biological assets they then have to correct it later by impairing their inventory or the books don't balance. In other words, you can't get away with overstating it.