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CA Final · Financial Reporting · Ind AS 41 Agriculture

Kaveri Orchards Ltd grows mango trees that it uses only to bear fruit year after year. At the reporting date the trees carry unharvested mangoes. How should the unharvested mangoes be treated?

The unharvested mangoes are a biological asset under Ind AS 41, because produce growing on bearer plants is specifically a biological asset. Only the trees themselves are bearer plants accounted for under Ind AS 16. The fruit is measured separately at fair value less costs to sell.

  1. AAs part of the mango trees, measured under Ind AS 16 at cost less depreciation
  2. BAs a biological asset within Ind AS 41, because produce growing on bearer plants is a biological assetCorrect
  3. CAs inventory under Ind AS 2 at lower of cost and net realisable value
  4. DAs a contingent asset, because the fruit has not yet been harvested

Explanation

Ind AS 41 states that produce growing on bearer plants is a biological asset. The bearer plants (the trees) are accounted for under Ind AS 16, but the growing fruit is separate and falls under Ind AS 41. Treating the fruit as part of the trees under Ind AS 16 is wrong because the produce is excluded from the bearer plant.

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