Section 8300: Hyperinflationary Economies
International Accounting Standard 29
Financial Reporting in Hyperinflationary Economies
1. First version of IAS 29
"Financial Reporting in Hyperinflationary Economies"
Issued in July 1989
Reformatted in 1994
[U.S. GAAP Codification Topic]
255 Changing prices
[U.S. GAAP before the Codification]
SFAS 89, December 1986, Financial Reporting and Changing Prices
2. IAS 29 is applied, in preparing financial statements,
--> if functional currency of an entity is
the currency of hyperinflationary economy
3. Indications of hyperinflation, IAS 29.3
(1) Cumulative inflation rate over three years --> is around 100% or higher
(2) More stable foreign currency is preferred for the following:
(a) wealth is kept
(b) prices are quoted
(3) Interest rates and wages are associated with price index
(4) Credit sale price is significantly higher than cash price
4. The measuring unit, IAS 29.8
--> current at the end of reporting period
--> is used in preparing financial statements
--> in hyperinflationary economies
5. Gain or loss on the net monetary position
--> is recognised in profit or loss
Separate disclosure is also required, IAS 29.9
6. Statement of Financial Position in Historical Costs
Amounts not stated in current measurement unit are restated
--> by applying general price index, IAS 29.11
Monetary items are not restated, IAS 29.12
Non-monetary items are restated
--> by applying general price index, IAS 29.14
7. Exceptions
Non-monetary items carried at current unit are not restated
Current unit includes: net realisable value, market value
8. Statement of Comprehensive Income in Historical Costs, IAS 29.11
All amounts are restated
--> by applying the change in general price index, between (1) and (2)
(1) the end of reporting period
(2) dates when income and expenses were recorded
9. Gain or loss on net monetary position = (1) x (2)
(1) weighted average of (1a)
(1a) monetary assets - monetary liabilities
(2) the change in general price index
Gain or loss on net monetary position
--> is recognised in profit or loss, IAS 29.26
10. Statement of Financial Position in Current Costs, IAS 29.29
Items measured at current cost are not restated
Items not measured at current cost are restated
11. Statement of Comprehensive Income in Current Costs
All items are restated by applying general price index, IAS 29.29
12. All items in the statement of cash flows, IAS 29.33
--> are reported in the current measuring unit
--> at the end of reporting period
13. Consolidated Financial Statements, IAS 29.35
When both parent and subsidiary report in hyperinflationary currencies,
--> financial statements of subsidiary are restated
--> using general price index of (1)
(1) the country of subsidiary's presentation currency
14. Translation of Foreign Subsidiary
Financial statements of (2) are translated at closing rates
--> (2) foreign subsidiary in hyperinflationary economies
Financial statements of (3) are translated following the rules of IAS 21
--> (3) foreign subsidiary not in hyperinflationary economies
15. Not Hyperinflationary Any More
If the economy is not hyperinflationary any more
--> amounts described in (1) are being used
--> as beginning carrying amounts, in subsequent financial statements
--> (1) amounts reported at the end of previous reporting period
which were measured in the unit current at that time.
| 
Index of IFRS Financial Reporting Textbook
