SARANSH Indian Accounting Standards

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Scope of Ind AS 41

Non-Applicability
Applicability

Land related to agricultural activity

(Ind AS 16 and Ind AS 40)

Agricultural produce Government grants as Bearer plants related to agricultural

Biological assets
at the point of harvest defined in Ind AS 20 activity (Ind AS 16)

Government grants related to bearer

When they relate to plants (Ind AS 20)
Living animal or plant
agricultural activity

Intangible assets related to

Produce growing on agricultural activity (Ind AS 38)
bearer plant

Right-of-use assets arising from a lease of

land related to agricultural activity
(Ind AS 116)

The table below provides examples of biological assets,

Note: agricultural produce, and products that are the result of
processing after harvest:
1. This Standard is applied to agricultural produce, which
Biological assets Agricultural Products that
is the harvested produce of the entity’s biological assets, produce are the result of
at the point of harvest. Thereafter, Ind AS 2 or another processing after
harvest
applicable Ind AS is applied. Hence, Ind AS 41 does not
deal with the processing of agricultural produce after Sheep Wool Yarn, carpet
harvest. Trees in a timber Felled Trees Logs, lumber
plantation
2. Ind AS 41 does not apply to Bearer plants but applies to Dairy Cattle Milk Cheese
the produce on those bearer plants.
Pigs Carcass Sausages, cured
hams
The following are NOT bearer plants:
Cotton plants Harvested cotton Thread, clothing
(a) Plants cultivated to be harvested as agricultural
produce (for example, trees grown for use as lumber); Sugarcane Harvested cane Sugar
Tobacco plants Picked leaves Cured tobacco
(b) Plants cultivated to produce agricultural produce
when there is more than a remote likelihood that Tea bushes Picked leaves Tea
the entity will also harvest and sell the plant as Grape vines Picked grapes Wine
agricultural produce, other than as incidental Fruit trees Picked fruit Processed fruit
scrap sales (for example, trees that are cultivated Rubber trees Harvested latex Rubber products
both for their fruit and their lumber); and
(c) Annual crops (for example, maize and wheat). Note:
3. Bearer plants no longer used to bear produce are still Some plants, for example, tea bushes, grape vines, oil palms
and rubber trees, usually meet the definition of a bearer plant
considered as bearer plant even when they might be cut
and are within the scope of Ind AS 16. However, the produce
down and sold as scrap. growing on bearer plants, for example, tea leaves, grapes, oil
palm fruit and latex, is within the scope of Ind AS 41.

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SARANSH Indian Accounting Standards

Agricultural biological into agricultural

activity is the transformation produce
management by
an entity of for sale or for
conversion
harvest of
biological assets
Features into additional
biological assets

Capability to change - Living animals/plants are capable of biological transformation

Management of change - Management facilitates biological transformation by enhancing,

or at least stabilising, conditions necessary for the process to take place (for example,
nutrient levels, moisture, temperature, fertility, and light)

Measurement of change - The change in quality (for example, genetic merit, density,
ripeness, fat cover, protein content, and fibre strength) or quantity (for example, progeny,
weight, cubic metres, fibre length or diameter, and number of buds) brought about
by biological transformation or harvest is measured and monitored as a routine
management function

Note: Harvesting from unmanaged sources (such as ocean fishing and deforestation) is not agricultural activity.

Biological Assets
Biological Transformation
Recognition Measurement
(when and only when)
is a processes of (causing qualitative
or quantitative changes in a biological
asset) the it is the fair initial at the end
entity probable value or recognition of each
controls that future cost of reporting
the economic the asset period
Growth Degeneration Production Procreation asset as benefits can be
a result associated measured
of past with the reliably
events asset will at its fair value less
An increase A decrease in Of flow to the costs to sell
in quantity or the quantity or agricultural Creation of entity
improvement deterioration produce such additional
in quality of in quality of as latex, tea living animals Exception
an animal or an animal or leaf, wool, and or plants
plant plant mik

This presumption can be rebutted only on initial recognition for a

Bearer plant It 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
Harvest It is the detachment of produce from
a biological asset or the cessation of a
biological asset’s life processes
biological asset when
a. quoted market prices are not available and
b. alternative fair value measurements determined are clearly unreliable.
In such a case, it shall be measured at its cost less any accumulated
depreciation and any accumulated impairment losses.
Note: Once the fair value of such a biological asset becomes reliably
measurable, an entity shall measure it at its fair value less costs to sell.
Note:
Once a non-current biological asset meets the criteria to be
classified as held for sale (or is included in a disposal group that is
classified as held for sale) as per Ind AS 105, it is presumed that fair
value can be measured reliably.

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SARANSH Indian Accounting Standards

Gain or Loss
Agricultural harvested is measured
produce from an at its fair
entity’s value less
biological costs to sell at From biological asset From agricultural produce
assets the point of
harvest

Change in fair Gain or loss

Gain or loss
value less costs on initial
on initial
Important points: to sell on the recognition
recognition
1. Entities often enter into contracts to sell their biological reporting date
assets or agricultural produce at a future date. Generally,
contract prices are not relevant in measuring the fair value.
2. The fair value of a biological asset or agricultural produce
is not adjusted because of the existence of a contract.
3. There may be no separate market for biological assets A loss A gain may Eg. A gain or
that are attached to the land but an active market may may arise arise on loss may arise on
exist for the combined assets, that is, the biological because reproduction initial recognition
assets, raw land, and land improvements, as a package. costs to or generation of agricultural
An entity may use information regarding the combined sell are like when a produce as a result
assets to measure the fair value of the biological assets. deducted in calf is born of harvesting
(For example, the fair value of raw land and land determining
improvements may be deducted from the fair value of the fair value
combined assets to arrive at the fair value of biological less costs
assets.) to sell of a
biological
4. An entity once measured a biological asset at its fair asset
value less costs to sell has to continue to measure the
biological asset at its fair value less costs to sell until
disposal.
5. Ind AS 41 assumes that the fair value of agricultural
produce at the point of harvest can always be measured Taken to Profit or Loss for the
reliably. period in which it arises

Government Grant for

Biological Asset

Measured at Fair value

less cost to sell Measured at Cost

When the grant is When the grant is Recognise as per Ind

conditional unconditional AS 20

Recognise the government Recognise the government

grant in Profit and Loss Account grant in Profit and Loss Account
when the condition attaching when it becomes receivable
to it are met

For disclosure, refer paragraphs 40-57 of bare text of Ind AS 41.

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