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CA Final · Financial Reporting · Ind AS 41 Agriculture

Sundarban Agro Ltd owns freehold land on which it grows sugarcane that is not a bearer plant, and the crop is standing in the field at the reporting date. Which accounting treatment is correct under Ind AS 41?

The standing sugarcane is a biological asset measured at fair value less costs to sell, with changes recognised in profit or loss. The land is outside Ind AS 41 and follows Ind AS 16 or Ind AS 40. The crop becomes inventory only after harvest.

  1. AThe standing sugarcane is a biological asset measured at fair value less costs to sell, with changes in profit or loss, while the land is outside Ind AS 41Correct
  2. BThe sugarcane and the land are both accounted for under Ind AS 41 at fair value
  3. CThe sugarcane is carried at cost until harvest and the land at fair value less costs to sell
  4. DThe sugarcane is inventory under Ind AS 2 from the date of planting

Explanation

A standing crop is a living plant, hence a biological asset, and it is measured at fair value less costs to sell with changes taken to profit or loss. Land related to agricultural activity is not within Ind AS 41 and is accounted for under Ind AS 16 or Ind AS 40. Inventory treatment applies only after harvest.

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