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CA Final · Financial Reporting · Ind AS 41 Agriculture

Himalayan Brew Ltd grows tea in Assam. Its tea bushes are bearer plants, and at the reporting date the bushes carry tea leaves that have not yet been plucked. How should the company treat the unplucked leaves under Ind AS 41?

The unplucked tea leaves are a biological asset under Ind AS 41, because the standard says produce growing on bearer plants is a biological asset. Only the bushes themselves go to property, plant and equipment, and the leaves become inventory only when plucked.

  1. AAs a biological asset, because produce growing on bearer plants is a biological assetCorrect
  2. BAs inventory under Ind AS 2, because the leaves are yet to be sold
  3. CAs part of property, plant and equipment together with the bushes
  4. DAs an intangible asset, because the leaves represent future crop rights

Explanation

Ind AS 41 states that produce growing on bearer plants is a biological asset. The bushes themselves are accounted for under Ind AS 16, but the unplucked leaves stay within Ind AS 41 until harvest. Treating them as inventory is premature, since inventory arises only at the point of harvest.

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