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Due to time pressure i am posting here also :))
I run a business of selling cows. I have many new-born cows which i want to sell when they become adult.
Question:-
Assume I have 10 new-born cows (for simplicity) which are going to become adult after 2 years which then i will sell. I will not take any other use from them.Will these cows be Inventory or will they be Non Current Assets?
To the best of my knowledge, cow (as given in your scenario) is one of the managed agricultural activities covered by IAS 41, Agriculture. Any agricultural activity after the point of harvest is to be covered by IAS 2, inventory.
As such, the cows should be recognized as Non current Assets.
They can only become inventory at the end of the 2 year period when they would have become adult and ready for sale.
Anyone else with different opinion can educate us further, please.
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