Menu Close

Overview of Ind AS 41, Agriculture

Indian Accounting Standard (Ind AS 41), Agriculture

The objective of Ind AS 41 is to prescribe the accounting treatment and disclosures related to agricultural activity.

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.

A 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.

A 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.

An entity should recognise a biological asset or agricultural produce only when:

(a) the entity controls the asset as a result of past events;

(b) it is probable that future economic benefits associated with the asset will flow to the entity; and

(c) the fair value or cost of the asset can be measured reliably.

A biological asset should be measured on initial recognition and at the end of each reporting period at its fair value less costs to sell, except where the fair value cannot be measured reliably, in which case it should be measured at its cost less any accumulated depreciation and any accumulated impairment losses.

Agricultural produce harvested from an entity’s biological assets should be measured at its fair value less costs to sell at the point of harvest.

A gain or loss arising on initial recognition of a biological asset at fair value less costs to sell and from a change in fair value less costs to sell of a biological asset should be included in profit or loss for the period in which it arises.

A gain or loss arising on initial recognition of agricultural produce at fair value less costs to sell should be included in profit or loss for the period in which it arises.

An unconditional government grant related to a biological asset measured at its fair value less costs to sell should be recognised in profit or loss when, and only when, the government grant becomes receivable.

An entity is required to make disclosures as prescribed in the Standard.

Get Important Stuff from CA Blog India Directly in Your Email Inbox:

Follow founder on:

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge