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CA Final · Financial Reporting · Ind AS 2 Inventories

Himalaya Tea Estates Ltd grows tea bushes and plucks green leaves, which it then processes into packaged tea in its factory. For the purpose of applying Ind AS 2 Inventories, which of the following is outside the scope of Ind AS 2?

The living tea bushes and the green leaves at the point of harvest are outside Ind AS 2, because biological assets and agricultural produce at harvest are covered by Ind AS 41. Finished tea, work-in-process and packing materials are inventories under Ind AS 2.

  1. APackaged tea held in the warehouse for sale
  2. BThe living tea bushes and the green leaves at the point of harvestCorrect
  3. CPacking materials to be consumed in the packaging process
  4. DProcessed tea in the factory that is still in the process of production

Explanation

Ind AS 2 excludes biological assets related to agricultural activity and agricultural produce at the point of harvest, which fall under Ind AS 41. Packaged tea, packing materials and work-in-process are inventories because they are held for sale, in production for sale, or are materials consumed in production. So the second option alone is outside the scope.

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