This study discusses the analysis of application of fair value and historical cost approaches used by agricultural companies in valuing their biological assets. The term of biological assets in this study refers to the biological assets possessed by agricultural companies specifically plantation companies. Due to IFRS convergence process done by IAI to adopt IAS 41, this study aims to provide initial evidence of the comparison of fair values approach and historical cost approach in valuing the biological assets. The comparison is intended to figure out the existence of significant differences in the value of assets, return on assets, revenue and earnings between two groups which uses two different valuation approaches. This study also aims to prove the existence of larger income smoothing propensity in the group of companies using fair values approach compared to those using historical cost approach. Eventually, the study tries to prove the influence of the fair value approach to earnings volatility which is indicated to be higher than the historical cost approach. Based on the result of statistical tests, it is concluded that there is no significant differences in the value and volatility of the assets, return on assets, revenue and earnings between the two groups. This finding implies that there is no significant influence of the application of fair value approach to the volatility of company's earnings.