Accounting treatment for live stocks in a manufacturing com

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Ananthselvaraj

Articled Assistant - final student

39 Points Posted on 09 December 2011

Hi...i have a doubt about the following issue..

A manufacturing company Purchased cows during the year to supply milk to be consumed in its Factory Canteen ( no commercial Sale of Milk ). Now the issues are

1. whether can it be accounted as an asset...?

2. If Answer to 1 above is YES, then what is the Valuation & Accounting Treatement for the CALFS, the Cow Yields...?

Replies (3)

CA Shanavas SP

Chartered Accountant

93 Points Posted on 10 December 2011

AS 10 or AS 2 or any other AS does not deal with livestock. Hence it has to be charged to p&l a/c as and when expenditure incurred. Under income tax act livestock does not form part of block of asset so as to treat it as an asset and claim depreciation. Regarding the calf, no expenditure is incurred hence no charge to P&L A/C.

Ananthselvaraj

Articled Assistant - final student

39 Points Posted on 10 December 2011

Hi...Friend ...Thank You for your reply...but i have an other view...The issue (ie, LIVE STOCKS ) will meet the Asset Recongnition Criteria, though it is not covered by AS- 2, As- 6 & AS-10 and hence can be capitalised. Now the isse is about the calfs.....

Z

Tax Consultation (US and India)

2348 Points Posted on 12 December 2011

AS-2 does not apply on live stocks BUT IT DOES lays down the criteria for valuation

AS-2 states " The inventories referred to in paragraph 1 (d) are measured at net realisable
value at certain stages of production"

para 1(d) (non applicability of the standard) states "producers’ inventories of livestock, agricultural and forest
products, and mineral oils, ores and gases to the extent that
they are measured at net realisable value in accordance with
well established practices in those industries."

Further "Monograph on Accounting for Livestock" was issued for the valuation of live stock

(it'll be too much to write ,

THE TEXT IN THE PIC IS COPYRIGHTED, (parts disclosed under fair dealing of Indian Copyright Act, 1957)

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