Overview-on-IND-AS-41-Agriculture

SBS Hyderabad 01st Sep, 2018 Overview on IND AS 41-Agriculture By B. Chaya Deepthi Intern M/s SBS and Company LLP chayadeepthib@sbsandco.com chayadeepthib@sbsandco.com www.sbsandco.com +919573909849

Agenda for the session Objective Scope Key definitions Recognition Measurement Disclosure 2

Objective Accounting Disclosures treatment Objective Relating to Agricultural activity 3 chayadeepthib@sbsandco.com www.sbsandco.com +919573909849 hoto by Unknown Author is licensed under CC C-ND

Scope • Biological Asset • Agricultural produce(Not yet harvested) Includes • Govt. grants on BA Excludes • Intangible Assets (AS 26/IND AS 38) • Land (AS 10/ IND AS 16) • Plant and machinery (AS 10/ IND AS 16) • Bearer Plants (AS 10/ IND AS 16) • Agricultural produce harvested (AS 2/ IND AS 2) • Govt. grants on above (AS 12/ IND AS 20) 4 chayadeepthib@sbsandco.com www.sbsandco.com +919573909849This Photo by Unknown Author is licensed under CC BY

Definitions (1/4)  Biological Asset: living Plants and animals  Agricultural activity: Management by an entity of the biological transformation and harvest of biological assets for sale or for conversion into agricultural produce or into additional agricultural produce. 5 chayadeepthib@sbsandco.com www.sbsandco.com +919573909849

Definitions (2/4)  Biological Transformation: comprises the process of  Growth- An Increase in Quantity or improvement in quality of an animal or plant  Degeneration-Decrease in quantity or deterioration in quality of an animal or plant  Production- of agricultural produce  Procreation-Creation of additional living animals and plants 6

Definitions (3/4)  Harvest: detachment of produce from a biological asset or the cessation of a biological asset’s life processes.  Agriculture produce: harvested product of the entity’s biological asset 7

Definitions (4/4)  Bearer Plant: may be defined as a living plant that: • is used in the production or supply of agricultural produce • is expected to bear produce for a period more than 1 accounting period and • has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales. 8 chayadeepthib@sbsandco.com www.sbsandco.com +919573909849

Examples Agricultural Produce Products that are resulted of Wool processing after harvest Biological Asset Milk Carpet Sheep Harvested Cane Dairy Cattle Picked grapes Cattle Sugar Cane Harvested cotton Grapevine Sugar Cotton plants Wine Thread, Clothing 9

Recognition of Assets  Entities are required to recognise a biological asset or agricultural produce only when all the following conditions are satisfied:  The entity controls the asset as a result of past events  It is probable that future economic benefits associated with the asset will flow to the entity and  The fair value or cost of the asset can be measured reliably.  Initial recognition will occur at the point of purchase or when biological assets are generated from existing assets such as calves from livestock.  Agricultural produce that is attached to a biological asset such as wool to sheep and grapes to vine is not recognised separately until the point of harvest. 10 chayadeepthib@sbsandco.com www.sbsandco.com +919573909849

Measurement  Biological Asset : Fair value – cost to sell  Agricultural produce : Fair value – cost to sell at initial recognition but later i.e, after harvest they are valued as per IND AS 2.  Biological Asset is valued at fair value less cost to sell at the end of every financial year. Any change in the value is recognised in profit and loss account. 11 chayadeepthib@sbsandco.com www.sbsandco.com +919573909849

Government Grants Biological Asset Measured at Fair Value –Cost Measured at Cost (fair value to sell cannot be measured reliably) Unconditional Grant Conditional Grant Cost less accumulated depreciation and any Recognised in P & L a/c when Recognised only when accumulated the grant becomes receivable conditions attached to it are impairment losses. fulfilled IND AS 20 is applied 12

Disclosure  Description of biological assets and activities  Gains and losses recognised during the period  Reconciliation of changes in biological assets  Restricted assets, commitments and risk management strategies  Additional disclosures when fair value cannot be measured reliably  Government grants 13 chayadeepthib@sbsandco.com www.sbsandco.com +919573909849

SBS and Company LLP Thank you!!! Chartered Accountants B. Chaya Deepthi Intern Our Presence in Telangana: Hyderabad (HO) M/s SBS and Company LLP Andhra Pradesh: Nellore, Kurnool, TADA (near Sri Chayadeepthib@sbsandco City), Vizag Karnataka: Bengaluru .com +91 9573909849 +91-40-40183366 / +91-40-64584494 / +91-9246883366 Read our monthly e-Journals www.sbsandco.com/wiki www.sbsandco.com/digest