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CA Final · Financial Reporting · Ind AS 41 Agriculture

Sundar Tea Estates Ltd grows tea bushes that it uses only to produce tea leaves year after year. At the reporting date the bushes carry unplucked tea leaves that are still growing. Under Ind AS 41, how should the company treat the bushes and the leaves growing on them?

The tea bushes are bearer plants and are accounted for under Ind AS 16 as property, plant and equipment. The unplucked leaves growing on them are a biological asset under Ind AS 41, because Ind AS 41 states that produce growing on bearer plants is a biological asset.

  1. ABoth the bushes and the growing leaves are biological assets measured at fair value less costs to sell
  2. BThe bushes are accounted for under Ind AS 16, while the growing leaves are a biological asset under Ind AS 41Correct
  3. CThe bushes are biological assets under Ind AS 41, while the growing leaves are accounted for under Ind AS 16
  4. DBoth the bushes and the growing leaves are inventory under Ind AS 2 until plucked

Explanation

Bearer plants such as tea bushes are accounted for as property, plant and equipment under Ind AS 16. The text states that produce growing on bearer plants is a biological asset, so the unplucked leaves fall under Ind AS 41. Treating the bushes as biological assets confuses the bearer plant with its produce.

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