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CA Final · Financial Reporting · Ind AS 41 Agriculture

Shakti Sugars Ltd carried a standing sugarcane crop (a biological asset) at Rs 8,00,000, being fair value less costs to sell at the previous measurement date. Just before harvest, the crop's fair value is Rs 15,00,000 and estimated costs to sell are Rs 1,00,000. The cane is then harvested and the same values apply at the point of harvest. What is the total gain recognised in profit or loss up to and including the harvest, and at what amount is the harvested cane initially recognised?

The gain in profit or loss is Rs 6,00,000 and the harvested cane is recognised at Rs 14,00,000. The crop is remeasured to fair value less costs to sell, Rs 15,00,000 minus Rs 1,00,000, giving a Rs 6,00,000 gain over Rs 8,00,000. Harvest produce uses the same value.

  1. AGain Rs 6,00,000; cane recognised at Rs 14,00,000Correct
  2. BGain Rs 7,00,000; cane recognised at Rs 15,00,000
  3. CGain Rs 5,00,000; cane recognised at Rs 14,00,000
  4. DGain Rs 6,00,000; cane recognised at Rs 8,00,000

Explanation

Before harvest the crop is remeasured to 15,00,000 − 1,00,000 = Rs 14,00,000, giving a gain of 14,00,000 − 8,00,000 = Rs 6,00,000 in profit or loss. On harvest, the produce is measured at the same fair value less costs to sell of Rs 14,00,000, so there is no further gain. Rs 7,00,000 ignores costs to sell, and Rs 5,00,000 deducts the costs to sell twice.

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