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“Explore the accounting standards (Ind AS 41) for agriculture, covering biological assets and agricultural produce. Learn about recognition, measurement, and the impact on the statement of profit and loss. Discover how government grants related to agriculture are accounted for under these standards.”

Traditionally agricultural activities are measured at historical cost .Therefore in India agricultural sector does not felt the need of any  separate accounting standard  in agriculture thanks to income tax exemption to the sector as per Income Tax Act 1961.

I. Following are the Accounting Standards related With Agriculture

1. Agriculture (Ind AS 41)

2. Agriculture (IAS 41)

II. Objective

1. To prescribe accounting standards for the agricultural sector.

III. Scope

This Standard shall be applied to account for the following when they relate to agricultural activity:

(a) Biological assets
(b) Agricultural produce at the point of harvest; and
(c) Government grants covered by paragraphs 34 and 35.

This Standard does not apply to:


Land related to agricultural activity (Ind AS 16:Property,Plant and Equipment)
(b) Bearer plants related to agricultural activity ( Ind AS 16)
(c) Government grants related to bearer plants (Ind AS 20).
(d) Intangible assets related to agricultural activity (Ind AS 38 Intangible Assets).
(e) Right-of-use assets arising from a lease of land related to agricultural activity (Ind AS -116).

IV. An entity shall recognize a biological assetor agricultural producewhen, and only when: 


The entity controls the asset as a result of past events;
(b) It is probable that future economic benefits associated with the asset will flow to  the entity; and
(c) The fair value or cost of the asset can be measured reliably.

V. Biological Assets

Biological asset is a living animal or plant

Example of Biological assets


Trees in a timber Plantation

Dairy Cattle


Cotton plants


Tobacco plants

Oil palms

Rubber trees

Agricultural produce.

Agricultural produce is the harvested product of the entity’s biological assets



Felled Trees



Harvested Cotton

Free standing trees

VI. Recognition and Measurement.

1. A biological asset shall be measured on initial recognition and at the end of each reporting period At its fair value less costs to sell (Shown in the Balance sheet).

2. 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. (Shown in the Balance Sheet)

Following gains or losses should be included in the statement of Profit or Loss.

1. All Costs  associated with the Biological assets plus cost to Sell would be shown in the statement of profit and loss.

2. Dcrease in the fair value of Biological assets during two periods would be Shown in the statement of profit and loss.

3. Increase in the fair value of Biological assets during two periods would be Shown in the statement of profit and loss.

4. Decrease due to harvest.

5. Any gain on the initial recognition of agricultural produce at fair value less cost to sell will

Be included in profit or loss for the period to which it relates.

VII. Government Grants

A government grant that is related to a biological asset measured at fair value less cost to sell should be recognized in profit or loss when the government grant becomes receivable.


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May 2024