Skip to content

CA Final · Financial Reporting · Ind AS 41 Agriculture

Kaveri Plantations Ltd grows tea on tea bushes, which are bearer plants, and the tea leaves on the bushes are not yet plucked at the reporting date. How should the company treat the unplucked tea leaves growing on the bushes under Ind AS 41?

The unplucked tea leaves are a biological asset under Ind AS 41, because the standard states that produce growing on bearer plants is a biological asset. Only the bearer plants (the bushes) fall under Ind AS 16. The leaves become inventory only after harvest.

  1. AAs part of property, plant and equipment along with the bushes under Ind AS 16
  2. BAs a biological asset, because produce growing on bearer plants is a biological assetCorrect
  3. CAs inventory under Ind AS 2 until the leaves are plucked
  4. DAs an intangible asset, since the leaves have no physical form until harvested

Explanation

Ind AS 41 (paragraph 5C) states that produce growing on bearer plants is a biological asset. The bearer plants themselves go under Ind AS 16, but the unplucked leaves are separate. Treating them as inventory is wrong because they become inventory only after harvest.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 41 Agriculture shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 41 AgricultureFree diagnostic mock

More Ind AS 41 Agriculture questions