The following extract is taken from an announcement released to the Australian Securities Exchange by the Australian Agricultural Company: AACo announced today its trading results for the three months to 30 September 2003 (Q1 FY04) in which unaudited revenue was $22.1 million from cattle sales equivalent to 12.6 million kilograms. Compared to the same period in 2002, revenue decreased 14%, while sales volume increased 21%. Earnings before interest and tax (EBIT) for the three months to 30 September 2003 was ($3.2) million and compares with $7.7 million in the previous corresponding period. The decrease in earnings was primarily due to there being no mark-to- market cattle value appreciation during the quarter compared to the previous corresponding period which saw a mark to market increase to trading cattle of 7.5%. The lack of early spring rain saw many Queensland producers increase supplies of cattle to market during the quarter with the resulting downward pressure on prices as at 30 September 2003 impacting on the valuation of AACo cattle at that date. This trend has reversed in October, with prices rising in some categories in the order of 10%. Chief Executive Officer of AACO, Mr Peter Holmes Court said 'We sold a high volume of cattle during the quarter, although the impact of last year's drought meant that they were generally at lighter weights. Prices, however, have subsequently risen due to the short supply of quality, finished cattle.'

Source: ASX Press Release, 30 October 2003, AACo First Quarter FY04 Briefing. Required (a) Explain what is meant by 'mark-to-market cattle value appreciation' in the context of AASB 141 'Agriculture'.

(b) Explain why no appreciation in the market value of cattle for the quarter ending 30 September 2003 resulted in a loss of $3.2 million compared to a profit of $7.7 million in the previous corresponding period.

(c) The volatile market conditions which had an impact on the Australian Agricultural Company serve to illustrate the principal difficulty of using fair value less costs to sell for biological assets.' Critically evaluate this comment.