IAS 41: Agriculture:

It applies to :
Biological assets Agricultural Produce Outside the scope of IAS 41
All the living plant and Products obtained from It includes products obtained
living animals like biological assets like: after processing the
 Sheep  Wool agricultural produce:
 Trees in timber  Milk  Yarn, carpet
plantation  Harvested cotton  Cheese, sugar, cured
 Dairy cattles  Picked leaves, tobacco, tea, wine,
 Pigs grapes, fruit, latex processed fruit,, rubber
 Tobacco plants etc products, etc
 Grape vines
 Fruit trees

IAS 41 doesn’t apply to: Land of farming.

Biological assets should be recognized if:
 It is probable that economic benefits will flow into the entity
 The cost or fair value can be reliably measured
 The entity controls the asset.
Measurement:
Initial measurement is at: Fair value les any estimated " point of sale" costs (think as
dismantling costs but occurring at point of sale). If the fair value can't be reliably measured
then, cost model of measurement should be applied.
Subsequent measurement: revalued to the fair value less "point of sale costs" at the year
end, taking the gains and losses to the SPL.
Ex: Cow gave birth to a calf its fv is 200 and the costs that will incur if we sell is 50.
Initial measurement: Dr asset 150 Cr income 150
Ex if next yr its value increased to 400 and cost to sell became 100 then
Dr asset 150( increased amount) Cr income 150( increased amount).
Ex if the 1st example calf was valued to 150 and the cost to sell was the same then, the
entry will be Dr spl 50 cr calf 50
Ex bought cow at 1000. But in the point of sale you have to do expenses like commission
costs, market fees of total 200.next year the value of the cow was 1700 as it grew and the
point of sale costs increased to 300. Do initial and subsequent entries.
Dr cow 800 Dr spl 200 Cr cash 1000 initial measurement
Dr cow 600 cr spl 600
Agricultural produce: recognized and measured at the date of harvest, FV less costs to sell.
Gains or losses on initial recognition is included in the statement of PL.`
There is no any subsequent measurement because after it is harvested, IAS 41 ceases to
apply and it treated as per IAS 2 inventory.
Govt grants on biological assets: Simple, put as income in SPL.