(Summary) Ind AS 29
Financial Reporting in Hyperinflationary Economies
is to establish specific standards for entities reporting in the currency of a hyperinflationary economy, so that the financial information provided is meaningful.
Applied to the FS, including the CFS, of any entity whose functional currency is the currency of a hyperinflationary economy.
- The FS of an entity whose functional currency is the currency of a hyperinflationary economy, whether they are based on a historical cost approach or a current cost approach, shall be stated in terms of the measuring unit current at the end of the reporting period.
- The corresponding figures for the previous period required by Ind AS 1 and any information in respect of earlier periods shall also be stated in terms of the measuring unit current at the end of the reporting period.
- The gain or loss on the net monetary position shall be included in profit or loss and separately disclosed.
- The restated amount of a non-monetary item is reduced, in accordance with appropriate Ind ASs, when it exceeds its the recoverable amount.
- The Standard does not establish an absolute rate at which hyperinflation is deemed to arise, but allows judgement as to when restatement of FS becomes necessary. 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. Amounts of local currency held are immediately invested to maintain purchasing power;
- The general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in that 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%.
When an economy ceases to be hyperinflationary and an entity discontinues the preparation and presentation of FS in accordance with this Ind AS, it should treat the amounts expressed in the measuring unit current at the end of the previous reporting period as the basis for the carrying amounts in its subsequent FS.
- Gain or loss on monetary items.
- The fact that FS and other prior period data have been restated for changes in the general purchasing power of the reporting currency.
- Whether the FS are based on an historical cost or current cost approach.
- Identity and level of the price index at the balance sheet date and moves during the current and previous reporting period.