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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?
From the course notes:
“measurement
• on initial recognition and on subsequent reporting dates, biological assets should be measured at fair value less estimated costs to sell, unless….
• ….. fair value cannot be reliably measured
• any gain on initial recognition of biological assets at fair value less costs to sell, and any changes during a period in fair value less costs to sell of biological assets are reported in the statement of profit or loss”
OK?
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