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CA Final · Financial Reporting · Ind AS 41 Agriculture

Kaveri Dairy Farms holds a herd of 200 sheep as biological assets. On 1 April the fair value of each sheep was ₹5,000 and the estimated costs to sell were ₹100 per sheep. On 31 March the fair value of each (same, unchanged herd, no purchases or sales) was ₹5,400 and the costs to sell were ₹120 per sheep. What gain from the change in fair value less costs to sell is recognised in profit or loss for the year?

The gain is ₹76,000. Opening fair value less costs to sell is 200 × 4,900 = ₹9,80,000, closing is 200 × 5,280 = ₹10,56,000, and the difference goes to profit or loss. Ignoring the change in costs to sell would wrongly give ₹80,000.

  1. A₹76,000Correct
  2. B₹80,000
  3. C₹1,00,000
  4. D₹56,000

Explanation

Opening carrying amount = 200 × (5,000 − 100) = ₹9,80,000. Closing = 200 × (5,400 − 120) = ₹10,56,000. Gain = ₹76,000 in profit or loss. Ignoring the change in costs to sell gives ₹80,000, which is wrong because the measurement basis is fair value less costs to sell.

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