IAS 29

FINANCIAL REPORTING
IN
HYPERINFLATIONARY
ECONOMIES
Group 6
JAMILLE SOLTIA
KOLIN RODEL
IDENTIFY THE COUNTRIES THAT
ARE INCLUDED IN THE LIST OF
HYPERINFLATIONARY
ECONOMIES
 Hyper-inflationary economies
The IMF WEO report shows that entities with the currency of the
following countries as their functional currency should apply IAS
29 as at 31 December 2022:
Argentina;
Ethiopia (new in 2022);
Iran;
Lebanon;
South Sudan;
Sudan;
Suriname;
Turkey (new in 2022);
Venezuela;
Yemen; and
Zimbabwe.
 Scope and Objective of IAS 29
Characteristics of the economic
environment of a country which
indicate the existence of

Table of
hyperinflation
Financial reporting in hyperinflation
Procedure for restatement
CONTENTS Disclosure
Comparison between IFRS and US GAAP
IFRIC 7 — Applying the
Restatement Approach under IAS
29 Financial Reporting in
Hyperinflationary Economies
SCOPE
This Standard shall be applied to the financial
statements, including the consolidated financial
statements, of any entity whose functional
currency is the currency of a hyperinflationary
economy

OBJECTIVE OF IAS 29
The objective of IAS 29 is to establish specific
standards for entities reporting in the currency of
a hyperinflationary economy, so that the financial
information provided is meaningful.
Characteristics of the economic environment
of a country which indicate the existence of
hyperinflation include:
the general population prefers to keep its wealth in non-monetary
assets or in a relatively stable foreign currency.
the general population regards monetary amounts not in terms of the
local currency but in terms of a relatively stable foreign currency.
sales and purchases on credit take place at prices that compensate
for the expected loss of purchasing power during the credit period,
even if the period is short;
interest rates, wages, and prices are linked to a price index; and
the cumulative inflation rate over three years approaches, or exceeds,
100%.
 FINANCIAL REPORTING IN
HYPERINFLATIONARY
ECONOMY
IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ requires the
financial statements of any entity whose functional currency is the
currency of a hyperinflationary economy to be restated for changes in the
general purchasing power of that currency so that the financial
information provided is more meaningful.
 1. The items in the financial statement are
classified into monetary and nonmonetary.
2. Monetary items are not restated.
3. Nonmonetary items are restated by
applying the general price index from the
date of acquisition to the end of the
PROCEDURES reporting period.
FOR 4. Some nonmonetary items are carried at
RESTATEMENT amount current at a date other than the
acquisition date.
5. All items in the income statement are
restated by applying the change in the
general price index from the date when the
items of income and expenses were
initially recorded
 6. The general purchasing power gain or
loss is computed.
7. The restated amount of property, plant
and equipment, goodwill and other
intangible asset is reduced when it exceeds
the recoverable amount.
PROCEDURES 8. Any revaluation surplus recognized
FOR previously is eliminated.
RESTATEMENT 9. Retained earnings would be the
balancing figure in the restated statement
financial position.
10. When comparative statements are
prepared, the monetary items of the
preceding year are expressed in terms of
the index number at the end of the current
year.
FORMULA FOR RESTATEMENT

Index number at the end of the reporting period Historical

x
Index number on acquisition date Cost
 DISCLOSURE
The fact that financial
statements and other prior
period data have been
restated for changes in the
general purchasing power of
the reporting currency [IAS
29.39]
Whether the financial
statements are based on an
historical cost or current
cost approach [IAS 29.39]
Identity and level of the price
index at the balance sheet
date and moves during the
current and previous
reporting period [IAS 29.39]
 IFRS vs US GAAP
IFRS US GAAP
IAS 29 & IFRIC 7 SUBTOPIC 225-10, ASC 830

Indexation to reflect The group presentation

purchasing power at the currency is adopted as the
METHODOLOGIES reporting date followed by functional currency of the
translation to presentation foreign operation (the ‘new
currency. functional currency’).

The beginning of the reporting The beginning of the reporting

APPLICATION DATE period in which hyperinflation period (including interim
is identified. reporting periods) following
that in which hyperinflation is
identified.
Retrospective, as if the currency
TRANSITION had always been hyperinflationary
Assets, liabilities and equity
– comparatives are generally
restated.
 IFRS vs US GAAP
IFRS
IAS 29 & IFRIC 7
At the application date, the opening
balances of the reporting period are
adjusted to reflect purchasing power
at the reporting date.
( i.e. are adjusted for changes in a
general price index.)
ASSETS, The closing balances of nonmonetary
LIABILITIES AND items are adjusted for changes in the
general price index for the year or
EQUITY from the date of acquisition,
contribution or revaluation if acquired,
contributed or revalued during the
period.
The gain or loss on the net monetary
position is recognized in profit or loss.
US GAAP
SUBTOPIC 225-10, ASC 830
Nonmonetary assets and liabilities
At the application date, the opening balances of
nonmonetary items are established in the new
functional currency based on the amounts reported in
the group financial statements at the end of the
immediately preceding reporting period.
Subsequently, nonmonetary items are accounted for
under the applicable literature as if they had always
been assets and liabilities in the new functional
currency.
Monetary assets and liabilities
At the application date, monetary items in the foreign
operation are treated in the same manner as any other
foreign currency monetary items.
Subsequently, monetary items are remeasured into the
new functional currency using current exchange rates.
Differences arising from the remeasurement of
monetary items are recognized in profit or loss.
 IFRIC 7
APPLYING THE
RESTATEMENT
APPROACH UNDER IAS
29
Group 6
JAMILLE SOLTIA
KOLIN RODEL
 The IFRIC 7 - Applying the

Restatement approach under

IAS 29
IFRIC 7 contains guidance on how an entity
would restate its financial statements(IAS29)
in the first year it identifies the existence of
hyperinflation in the economy of its functional
currency, when the economony was not
hyperinflationary.
 The main requirements of the

Interpretation
1. Restatement of comparative amounts
In the period in which the economy of an entity's functional currency
becomes hyperinflationary, the entity shall apply the requirements of IAS
29 as though the economy had always been hyperinflationary.

The effect of this requirement is that restatements of non-monetary

items carried at historical cost are made from the dates at which those
items were first recognised; for other non-monetary items the
restatements are made from the dates at which revised current values
for those items were established.
 The main requirements of the

Interpretation
2. Impact on Deferred Taxation
Deferred tax amounts in the opening balance sheet are determined in
two stages:
a. Deferred tax items are remeasured in accordance with IAS 12
Income Taxes after restating the nominal carrying amounts of the
non-monetary items in the opening balance sheet by applying the
measuring unit at that date.

b. The deferred tax items remeasured in this way are restated for the
change in the measuring unit from the date of the opening balance
sheet to the date of the closing balance sheet.
THANK YOU