Indian Accounting Standard (Ind AS) 41 Summary
Indian Accounting Standard (Ind AS) 41, Agriculture shall be applied to account for the following when they relate to agricultural activity:
– Biological assets,
– Agricultural produce at the point of harvest, and
– Conditional and unconditional government grants relating to a biological asset.
Living animals or plants are in the scope of the standard if they are subject to a process of management of biological transformation.
Biological assets are measured at Fair Value Less Costs To Sell (FVLCTS) unless it is not possible to measure fair value reliably, in which case they are measured at cost.
Gains and losses from changes in FVLCTS are recognised in profit or loss.
Agriculture produce harvested from a biological asset is measured at FVLCTS at the point of harvest. After harvest, Ind AS 2, Inventories generally applies.
Important Terms used in Ind AS
Agricultural activity is the management by an entity of the biological transformation and harvest of biological assets for sale or for conversion into agricultural produce or into additional biological assets.
Agricultural produce is the harvested product of the entity’s biological assets.
Bearer Plant is a living plant that,
a) Is used in the production or supply of agricultural produce
b) Is expected to bear produce for more than one period, and
c) Has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.
Biological asset is a living animal or plant.
Biological transformation comprises the processes of growth, degeneration, production, and procreation that cause qualitative or quantitative changes in a biological asset.
Costs to sell are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income taxes.
A group of biological assets is an aggregation of similar living animals or plants.
Harvest is the detachment of produce from a biological asset or the cessation of a biological asset’s life processes.
Carrying amount is the amount at which an asset is recognised in the balance sheet.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Consumable biological assets are those that are to be harvested as agricultural produce or sold as biological assets.
Bearer biological assets are those other than consumable biological assets.
Mature biological assets are those that have attained harvestable specifications (for consumable biological assets) or are able to sustain regular harvests (for bearer biological assets).