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CA Final · Financial Reporting · Ind AS 41 Agriculture

Mahalaxmi Orchards Ltd prepares financial statements under Ind AS. Its mango trees are bearer plants and it holds fruit growing on those trees at year end. A trainee suggests the following treatment. Which is consistent with Ind AS 41 as notified?

The mango trees, being bearer plants, are accounted for under Ind AS 16, while the fruit growing on them is a biological asset under Ind AS 41, because the standard expressly treats produce growing on bearer plants as a biological asset.

  1. ABoth the mango trees and the growing fruit are biological assets under Ind AS 41
  2. BBoth the mango trees and the growing fruit are PPE under Ind AS 16
  3. CThe mango trees are accounted under Ind AS 16 and the growing fruit is a biological asset under Ind AS 41Correct
  4. DThe mango trees are biological assets and the growing fruit is PPE

Explanation

Bearer plants are outside the measurement scope of Ind AS 41 and are accounted under Ind AS 16. Paragraph 5C says produce growing on bearer plants is a biological asset. Hence the fruit follows Ind AS 41, so the first option wrongly includes the trees.

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