Hari Singh, the head of the Dairy Division at Dhagwar, Himachal Pradesh. He has done his masters in dairy farming (specialization). Financial…

(a) Extract from Balance Sheet Non-Current Asset Note Reference Amount (₹) Property, Plant and Equipment Land Note C 3,00,00,000 Biological assets other than bearer plants Dairy Cows Note A (iii) 52,00,000 Calves Note B 8,80,000 Inventory Milk Note E 4,50,000 Extract from the Statement of Profit & Loss Note Reference Amount (₹) Income Change in fair value of purchased dairy cow Note (A) (iii) 10,00,000 Change in fair value of newly born calves Note B 8,80,000 Grant received Note D 10,00,000 Fair value of milk Note E 4,50,000 Total Income 33,30,000 Expenses Maintenance Note A (iv) 12,00,000 Breeding fee Note A (iv) 5,00,000 Total Expense 17,00,000 Net Income 16,30,000 Working Note The impact of various transactions mentioned in Annexture 1, as regards dairy operations at Dhagwar, Himachal Pradesh for FY 2025-26 in the financial reports, of FY 2025-26 are as below: (A) Acquisition of Dairy Cows: The herd of cows are biological assets as per Ind AS 41 that covers reporting requirements for the agricultural sector. It mentions that agricultural activity includes the management of the transformation of biological assets (living plants and animals) into agricultural produce (harvested product of the entity's biological assets). Here dairy cows (animals) are used to produce dairy products like milk (harvested produce). Dairy cows, that represent the biological asset will be recorded as Separate line item “Biological Asset other than bearer plants” under non-current asset in the Balance Sheet using the fair value model laid down in Ind AS 41. Accordingly, the 100 cows which had an average age of 3 years that were purchased on April 1st, 2025, had a fair value of 42,000 per cow. As of year end, there has been an increase in the value of this biological asset. This is on account of 2 factors: (i) Increase in the price of a 3-year-old cow from 42,000 per cow to 50,000 per cow. This represents an increase of 8,00,000 on account of the increase in price (₹ 50,000 per cow -42,000 per cow = 8,000 per cow × 100 cows = 8,00,000). This will be recognized in the profit and loss account for FY 2025-26. (ii) Physical change in cow, due to the passage of 1 year increases the average age of cows from 3 years to 4 years. On account of this on March 31st, 2026, while a 3-year-old cow is valued at 50,000 per cow; the cows that now have an average age of 4 years as of this date are valued at 52,000 per cow. Therefore, each cow has had its market value increase by - 2,000 per cow as of March 31st, 2026. This increase in the value of the biological asset due to physical change works out to 2,00,000 (₹ 52,000 per cow -50,000 per cow) ×100 cows). This will be recognized in the profit and loss account for FY 2025-26. (iii) Accordingly, as of March 31st, 2026, the Balance Sheet will reflect - 52,00,000 as the value of 100 cows with an average age of 4 years (100 cows × ₹ 52,000 per cow). The profit and loss account will show an income of 10,00,000 on account of (a) price increase in the value of biological asset - 8,00,000 (refer point (i) above) and (b) increase in value due to physical change of the biological asset - 2,00,000 (refer point (ii) above). (iv) Corresponding expenses, of 5,00,000 breeding fees paid to the local farmer and - 12,00,000 various herd maintenance expenses will be considered as expenses in the profit and loss account for the year. (B) Calves born during FY 2025-26: These biological assets have been acquired on account of breeding the cows. It is not possible to calculate the "cost of acquisition" of such calves and hence they will be shown as an asset in the Balance Sheet valued at fair value as on March 31st 2026, and this value will be credited to the profit and loss as income for the year. It is given that 20 calves were born on October 1st, 2025. Therefore, their age, as on March 31st 2026, will be 6 months. The fair value net of any cost to sell of these calves as on March 31st, 2026, is 44,000 per calf. Hence the value of 20 calves at the year end will be - 8,80,000, in the balance sheet as well as considered as income in the profit and loss for the year. (C) Land acquisition: The purchase of land is not covered under Ind AS 41. The relevant standard would be Ind AS 16 “Property, Plant and Equipment". According to it land would be considered as an asset, valued at cost in the Balance Sheet as of March 31st 2026. Since the useful economic life of the land is infinite, no depreciation can be charged against it. Therefore, the value of land as shown in the Balance Sheet as of March 31st 2026, will be at the cost of acquisition which is 3crores. Any subsequent change in market value post-acquisition is ignored under the cost model. (Please note that the allowed alternative corresponding treatment under revaluation model permits the land to be revalued to market value with the revaluation surplus taken to other comprehensive income). (D) Grant received: VEN received a non-refundable grant of 10,00,000 for acquisition of cows. It is not subject to any conditions or requirements to be satisfied; hence it is an unconditional grant. As per Ind AS 20, this grant needs to be considered as income of the company and credited to the profit and loss account. (E) Inventory of milk: Milk is an agricultural produce and will be measured on the same basis as biological assets. As of March 31st, 2026, VEN has 10,000 litres of milk in cold storage, the fair value of which is 45per litre. Therefore, milk would be valued at 4,50,000. This will be reflected as part of Inventory in the Balance Sheet. This is regarded as "cost" for future application of Ind AS 2 to the unsold milk. The fair value of milk is also considered as income in the profit and loss account.