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CA Final · Financial Reporting · Ind AS 41 Agriculture

Kaveri Plantations Ltd grows tea on tea bushes, which are bearer plants, and the bushes carry unplucked tea leaves at the reporting date. Which statement correctly reflects Ind AS 41 for the unplucked leaves?

The unplucked tea leaves are a biological asset. Ind AS 41 states that produce growing on bearer plants is a biological asset, so the leaves fall under Ind AS 41 until harvest. Only the bushes themselves, being bearer plants, are accounted for as property, plant and equipment.

  1. AThe leaves are a biological asset because produce growing on bearer plants is a biological assetCorrect
  2. BThe leaves form part of property, plant and equipment along with the bushes, so Ind AS 16 applies to them
  3. CThe leaves are not recognised until they are plucked, as they are not yet agricultural produce
  4. DThe leaves are inventory under Ind AS 2 from the date they start growing

Explanation

Paragraph 5C of Ind AS 41 states that produce growing on bearer plants is a biological asset. So the unplucked leaves are accounted for under Ind AS 41, while the bushes themselves are bearer plants under Ind AS 16. Treating the leaves as PPE or inventory is wrong because they remain biological assets until harvest.

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