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CA Final · Financial Reporting · Ind AS 2 Inventories

Kaveri Agro Ltd is a manufacturer that holds the following at year end: (a) packaged finished spices for sale, (b) a herd of living dairy cattle used in its agricultural activity, (c) units of a mutual fund held as treasury investments, and (d) raw cloves in stock for blending. Which items fall within the scope of Ind AS 2 as inventories?

Only the packaged finished spices and the raw cloves are within Ind AS 2. Living dairy cattle are biological assets related to agricultural activity, and mutual fund units are financial instruments; the standard expressly excludes both categories from its scope.

  1. A(a), (b) and (d)
  2. B(a) and (d) onlyCorrect
  3. C(a), (c) and (d)
  4. D(a), (b), (c) and (d)

Explanation

Ind AS 2 applies to all inventories except financial instruments and biological assets related to agricultural activity and agricultural produce at the point of harvest. Living dairy cattle are biological assets and mutual fund units are financial instruments, so both are excluded. Packaged spices and raw cloves held for blending remain within scope.

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