Para 13 of Ind AS 41, Agriculture, requires that an agricultural produce harvested from an entity’s biological assets shall be measured at its fair value less costs to sell at the point of harvest. Such measurement is the cost at that date when applying Ind AS 2 Inventories or another applicable Standard.
Further, para 40 requires that an entity shall disclose the aggregate gain or loss arising during the current period on initial recognition of biological assets and agricultural produce and from the change in fair value less costs to sell of biological assets.
On combined reading of the paras of the standard, an entity is required to measure the agricultural produce at the point of harvest at fair value less cost to sell as gain or loss in the statement of profit and loss. This story discusses the above provisions with the help of a case study where milk is the agricultural produce harvested, how it is initially recognised at the point of harvest and after point of harvest (as per Ind AS 2) in the books of accounts.
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