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CA Final · Financial Reporting · Ind AS 2 Inventories

Kaveri Agro Ltd. harvested tea leaves from its own plantation and then processed them into packaged tea. Which statement correctly reflects the scope of Ind AS 2 for this situation?

Ind AS 2 excludes biological assets related to agricultural activity and agricultural produce at the point of harvest, which are covered by Ind AS 41. The tea bushes and the leaves at harvest are therefore outside Ind AS 2, while later processed packaged tea is inventory.

  1. AInd AS 2 applies to the tea bushes (living plants) and the harvested leaves alike
  2. BInd AS 2 applies to the standing tea bushes but not to harvested leaves
  3. CInd AS 2 does not apply to the living plants or to agricultural produce at the point of harvest, which fall under Ind AS 41Correct
  4. DInd AS 2 never applies to any product made from agricultural produce, including packaged tea

Explanation

Ind AS 2 excludes biological assets related to agricultural activity and agricultural produce at the point of harvest, which are dealt with in Ind AS 41. After harvest, Ind AS 41 measurement is the starting point and the processed packaged tea is inventory under Ind AS 2. Option D overstates the exclusion because it covers only the biological assets and the produce at the point of harvest, not later processed goods.

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