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CA Final · Financial Reporting · Ind AS 41 Agriculture

Kisan Orchards Ltd owns mango trees that it uses only to bear fruit for sale. It has just completed its balance sheet date at a point when unharvested mangoes are hanging on the trees. How should the unharvested mangoes be treated under Ind AS 41?

Unharvested mangoes on bearer trees are a biological asset under Ind AS 41, because the standard says produce growing on bearer plants is a biological asset. The trees are accounted for under Ind AS 16, and the fruit becomes inventory only after harvest.

  1. AAs a biological asset within Ind AS 41, because produce growing on bearer plants is a biological assetCorrect
  2. BAs part of the carrying amount of the trees under Ind AS 16, since the fruit is attached to them
  3. CAs inventory under Ind AS 2 at the lower of cost and net realisable value
  4. DAs an intangible asset until the fruit is harvested

Explanation

Ind AS 41 states that produce growing on bearer plants is a biological asset. The trees themselves, being bearer plants, are accounted for under Ind AS 16, but the unharvested fruit is not part of that carrying amount. It becomes inventory under Ind AS 2 only after harvest.

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