To which of the following items does IAS 41 Agriculture apply?
(i) A change in the fair value of a herd of animals relating to the unit price of the animals.
(ii) Logs held in a wood yard.
(iii) Farmland is used for growing vegetables.
(iv) The cost of developing a new type of crop seed that is resistant to tropical diseases.

IAS 41 should be applied to account for the following when they relate to agricultural activity:

(i) Biological assets.
(ii) Agricultural produce at the point of harvest.
(iii) Certain government grants.
(iv) Land related to agricultural activity.
(v) Intangible assets related to agricultural activity.

IAS 41 is applied to agricultural produce:

Agricultural activity is the management of biological transformation of biological assets:
(i) for sale
(ii) into agricultural production.
(iii) into additional biological assets.

Identify whether the following items would be accounted for under IAS 41 Agriculture or not.
Dairy cattle
Milk
Cheese

The agricultural activity covers a diverse range of activities; for example:
(i) Raising livestock
(ii) Forestry
(iii) Annual or perennial cropping
(iv) Cultivating orchards and plantations
(v) Food processing

An active market is a market where all the following conditions exist:
(i) The items traded within the market are homogeneous
(ii) Willing buyers, and sellers, can normally be found at any time
(iii) Prices are available to the public
(iv) The market trades every day

An undertaking should record a biological asset, or agricultural produce, only when:
(i) The undertaking controls the asset, as a result of past events.
(ii) Future benefits, associated with the asset, will flow to the undertaking.
(iii) The fair value, or cost, of the asset can be measured reliably.

Point-of-sale costs include:
(i) Commissions to brokers and dealers.
(ii) Levies by regulatory agencies.
(iii) Levies by commodity exchanges.
(iv) Transfer taxes and duties.
(v) Transport, and other costs, necessary to transport assets to a market.

Pluto Limited owned a one-year-old herd of cattle on 1 January, recognized in the financial
statements at Rs. 140 million. On 31 December, the fair value of a two-year-old herd of cattle is Rs.
170 million. Costs to sell are still estimated to be Rs. 5 million for the whole herd.
What is the correct accounting treatment for the cattle on 31 December according to IAS 41
Agriculture?

The information sources may suggest different conclusions as to the fair value of a biological asset,
or agricultural produce. Use:

A grant related to a biological asset measured at cost because ‘fair value less estimated point-of sale
costs’ could not be measured reliably, should be recorded as income:

A conditional grant related to a biological asset measured at its ‘fair value less estimated point-of sale
costs’ should be recorded as income:

A gain (or loss) may arise on initial recognition of a biological asset:
(i) Because estimated point-of-sale costs are deducted in determining ‘fair value less
estimated point-of-sale costs of a biological asset
(ii) When a calf is born
(iii) As a result of harvesting

An unconditional grant related to a biological asset measured at its ‘fair value less estimated point of-
sale costs’ should be recorded as income:

Wool Limited (WL) started its business on 1 April 2015.
On 1 April 2015, WL purchased a flock of sheep for Rs. 100 million. On 31 March 2016, the flock
was valued at Rs. 120 million. Every time animals are sold there is a 5% commission fee payable
to the district municipal corporation.
No further sheep were purchased or sold during the year.
During the year, the wool sheared by WL had “fair value less point of sale costs” of Rs. 8 million.
At which amount the flock of sheep should be presented in the financial statement of WL as of 31 March
2016?

Wool Limited (WL) started its business on 1 April 2015.
On 1 April 2015, WL purchased a flock of sheep for Rs. 100 million. On 31 March 2016, the flock
was valued at Rs. 120 million. Every time animals are sold there is a 5% commission fee payable
to the district municipal corporation.
No further sheep were purchased or sold during the year.

During the year, the wool sheared by WL had “fair value less point of sale costs” of Rs. 8 million.
Calculate the total income of WL in respect of its agriculture activity for the year ended 31 March
2016.

Maria Limited (ML) bought an oil palm garden for Rs. 150 million (includes Rs. 120 million for land) on
1 January 2019. The garden is expected to give agricultural produce for the next three years before the replantation
process.
On 31 December 2019, the year-end, the fair value of the garden is Rs. 22 million (excluding land).
Estimated point-of-sale costs are Rs. 2 million.
Land has fair value of Rs. 130 million on 31 December 2019.
ML uses cost model for items under the scope of IAS 16 and ‘fair value less point of the sale cost for items
under the scope of IAS 41
What is the total amount of non-current assets to be presented in the statement of financial position of
ML as of 31 December 2019?

Cow Limited (CL) owned cattle recorded in the financial statements at Rs. 10.5 million on 1 January
2014.
On 31 December 2014, the cattle have a fair value of Rs. 13 million. If CL sold the cattle, commission
of 2% would be payable.
What is the gain to be recognized in profit or loss for the period ended on 31 December 2014
according to IAS 41 Agriculture?

A herd of fifty 3-year old animals was held on 1 January 2013. On 1 July 2013 ten 3.5-year-old
Animals were purchased for Rs. 40,000.
The fair values less estimated point of sale costs were:
 3-year-old animal at 1 January 2013 Rs. 32,000
 3.5-year-old animal at 1 July 2013 Rs. 40,000
 4-year-old animal at 31 December 2013 Rs. 43,000
Calculate the amount that will be taken to the statement of profit or loss for the year ended 31
December 2013.

IAS 41 is applied to agricultural produce:

A conditional grant related to a biological asset measured at its ‘fair value less estimated cost to sell’ should be recorded as income:

Fazal Limited owns a herd of cows recorded at Rs. 36 million on 1 January 2019. On 31 December 2019, these cows have a fair value of Rs. 50 million. A commission of 4% would be payable upon sale. What is the correct accounting treatment for the cows on 31 December 2019 according to IAS 41?

IAS 41 applies to: