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TMI BlogAgricultureX X X X Extracts X X X X X X X X Extracts X X X X ..... (d) intangible assets related to agricultural activity (See Ind AS 38 Intangible Assets). 1[(e) right-of-use assets arising from a lease of land related to agricultural activity (see Ind AS 116, Leases)] 3 This Standard is applied to agricultural produce, which is the harvested produce of the entity's biological assets, at the point of harvest. Thereafter, Ind AS 2 Inventories or another applicable Standard is applied. Accordingly, this Standard does not deal with the processing of agricultural produce after harvest; for example, the processing of grapes into wine by a vintner who has grown the grapes. While such processing may be a logical and natural extension of agricultural activity, and the events taking place may bear some similarity to biological transformation, such processing is not included within the definition of agricultural activity in this Standard. 4 The table below provides examples of biological assets, agricultural produce, and products that are the result of processing after harvest: Biological assets Agricultural produce Products that are the result of processing after harvest Sheep Wool Yarn, carpet Trees in a timber plantation Felled Trees Logs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their lumber); and (c) annual crops (for example, maize and wheat). 5B When bearer plants are no longer used to bear produce they might be cut down and sold as scrap, for example, for use as firewood. Such incidental scrap sales would not prevent the plant from satisfying the definition of a bearer plant. 5C Produce growing on bearer plants is a biological asset. 6 Agricultural activity covers a diverse range of activities; for example, raising livestock, forestry, annual or perennial cropping, cultivating orchards and plantations, floriculture and aquaculture (including fish farming). Certain common features exist within this diversity: (a) Capability to change Living animals and plants are capable of biological transformation; (b) 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). Such management distinguishes agricultural activity from other activities. For example, harvesting from unmanaged sources (such as ocean fishing and deforestation) is not agricultural activity; and (c) Measure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 14 [ Refer Appendix 1] 15 The fair value measurement of a biological asset or agricultural produce may be facilitated by grouping biological assets or agricultural produce according to significant attributes; for example, by age or quality. An entity selects the attributes corresponding to the attributes used in the market as a basis for pricing. 16 Entities often enter into contracts to sell their biological assets or agricultural produce at a future date. Contract prices are not necessarily relevant in measuring fair value, because fair value reflects the current market conditions in which market participant buyers and sellers would enter into a transaction. As a result, the fair value of a biological asset or agricultural produce is not adjusted because of the existence of a contract. In some cases, a contract for the sale of a biological asset or agricultural produce may be an onerous contract, as defined in Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets. Ind AS 37 applies to onerous contracts. 17-21 [ Refer Appendix 1] 4[22 An entity does not include any cash flows for financing the assets or reestablishing biological assets after harvest (for examp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess any accumulated depreciation and any accumulated impairment losses. 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. 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) in accordance with Ind AS 105 Noncurrent Assets Held for Sale and Discontinued Operations, it is presumed that fair value can be measured reliably. 31 The presumption in paragraph 30 can be rebutted only on initial recognition. An entity that has previously measured a biological asset at its fair value less costs to sell continues to measure the biological asset at its fair value less costs to sell until disposal. 32 In all cases, an entity measures agricultural produce at the point of harvest at its fair value less costs to sell. This Standard reflects the view that the fair value of agricultural produce at the point of harvest can always be measured reliably. 33 In determining cost, accumulated depreciation and accumulated impairment losses, an entity considers Ind AS 2, Ind AS 16 and Ind AS 36 Impairment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogical assets, as appropriate. For example, an entity may disclose the carrying amounts of consumable biological assets and bearer biological assets by group. An entity may further divide those carrying amounts between mature and immature assets. These distinctions provide information that may be helpful in assessing the timing of future cash flows. An entity discloses the basis for making any such distinctions. 44 Consumable biological assets are those that are to be harvested as agricultural produce or sold as biological assets. Examples of consumable biological assets are livestock intended for the production of meat, livestock held for sale, fish in farms, crops such as maize and wheat, produce on a bearer plant and trees being grown for lumber. Bearer biological assets are those other than consumable biological assets; for example, livestock from which milk is produced and fruit trees from which fruit is harvested,. Bearer biological assets are not agricultural produce but, rather, are held to bear produce. 45 Biological assets may be classified either as mature biological assets or immature biological assets. Mature biological assets are those that have attained harvestable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ample, when raising chickens or growing cereal crops). 52 Biological transformation results in a number of types of physical change-growth, degeneration, production, and procreation, each of which is observable and measurable. Each of those physical changes has a direct relationship to future economic benefits. A change in fair value of a biological asset due to harvesting is also a physical change. 53 Agricultural activity is often exposed to climatic, disease and other natural risks. If an event occurs that gives rise to a material item of income or expense, the nature and amount of that item are disclosed in accordance with Ind AS 1 Presentation of Financial Statements. Examples of such an event include an outbreak of a virulent disease, a flood, a severe drought or frost, and a plague of insects. Additional disclosures for biological assets where fair value cannot be measured reliably 54 If an entity measures biological assets at their cost less any accumulated depreciation and any accumulated impairment losses (see paragraph 30) at the end of the period, the entity shall disclose for such biological assets: (a) a description of the biological assets; (b) an explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if any, between Indian Accounting Standard (Ind AS) 41 and the corresponding International Accounting Standard (IAS) 41, Agriculture. Comparison with IAS 41, Agriculture 1. Different terminology is used in this standard, e.g., the term 'balance sheet' is used instead of 'Statement of financial position', and 'Statement of profit and loss' is used instead of 'Statement of Profit and Loss and comprehensive income'. 2. Following paragraphs appear as 'Deleted 'in IAS 41. However, in order to maintain consistency with paragraph numbers of IAS 41, the paragraph numbers are retained in Ind AS 41: (i) Paragraph 9 (ii) Paragraph 14 (iii) Paragraphs 17-21 (iv) Paragraph 23 (v) Paragraph 39 (vi) Paragraphs 47-48 3[3. Paragraphs 58-63 of IAS 41 have not been included in Ind AS 41 as these paragraphs relate to effective date and transition which is not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IAS 41, these paragraph numbers are retained in Ind AS 41.] Also see in PDF Indian Accounting Standard (Ind AS) 41 Agriculture ********** Notes 1. Inserted vide NOTIFICATION No. [F. No. 01/01/2009-CL-V-(Part VII)] dated 30-03-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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