A Ltd. purchased 100 goats at an auction for 1,00,000 on 30th September, 20X7. Subsequent transportation costs were - 1,000. A Ltd. would have to…

Journal Entries Initial recognition of goats at 30th September, 20X7 ₹ ₹ Biological asset (goats) Dr. 97,000 Loss on initial recognition Dr. 4,000 To Cash (purchase and transport to farm) 101,000 (Initial recognition of the goats at fair value less costs to sell) Veterinary expenses Dr. 500 To Cash 500 Recognition of veterinary expenses at 30th September, 20X7 (such expenses do not, in themselves, affect the fair value) Biological asset (goats) Dr. 9,800 To Gain on change in fair value less costs to sell (1,06,800-97,000) 9,800 (Subsequent measurement of biological assets at fair value less costs to sell at 31st March, 20X7 reporting date) Sale of goats on 1st June, 20X8 Cash Dr. 19,450 Selling expenses (150+400) Dr. 550 To Revenue 20,000 (Recognition of the revenue from the sale of goats) Transfer of biological assets to inventory on 15th September, 20X8 Inventory (Carcasses) Dr. 47,880 Fair value loss on goats Dr. 1,176 To Biological asset (goats) (the proportion of goats sold using the fair value at the previous reporting period, 31st March, 20X8) (1,06,800 x 42/100) 44,856 To Cash 4,200 (Transfer of goats slaughtered to inventory) Subsequent measurement of goats at 30th September, 20X8 Loss on change in fair value less costs to sell Dr. 18,440 To Biological asset (goats) (fair value of goats at last reporting date less transfer to inventory) (43,504-(1,06,800-44,856)) 18,440 (Subsequent measurement of biological assets at fair value less costs to sell at 30th September, 20X8 reporting date) Working Notes: 1. The fair value less costs to sell at initial recognition ₹ Fair value in the most relevant market 1,00,000 Transport costs (1,000) Auctioneer's fee (2,000) 97,000 2. The fair value less costs to sell at 31st March, 20X8 and gain thereupon ₹ Fair value in the most relevant market 1,10,000 Transport costs (1,000) Auctioneer's fee (2,200) 1,06,800 Less: Original cost recorded (97,000) 9,800 3. The fair value less estimated costs to sell of the carcasses on 15th September, 20X8 Market value of carcasses 48,300 Transport costs (420) 47,880 Initial cost of the carcasses at the date of transfer to inventory is measured at the fair value less costs to sell of the carcasses. [Ind AS 41.13] 4. The fair value less costs to sell at 30th September, 20X8 Fair value in most relevant market 44,800 Transport costs (400) Auctioneer's fee (896) 43,504 The reduction in the herd due to the sale of goats at 1st June, 20X8 is included in the fair value adjustment at 30th September, 20X8. An alternative to the above presentation is to remeasure the goats to fair value just prior to the point at which they are sold and record a cost of sales figure separately with a corresponding reduction in the value of the biological assets. This will result in the same net profit for the period, but the presentation of cost of sales and net fair value re-measurements on biological assets will be different.