This free, guided checker walks your finance team through the key decision points for IAS 29 Financial Reporting in Hyperinflationary Economies. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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IAS 29 applies to the financial statements of any entity whose functional currency is the currency of a hyperinflationary economy, including foreign subsidiaries consolidated by a parent.
IAS 29 does not apply (IAS 29.1); continue with historical cost or other applicable IFRS measurement and reassess the indicators each period.
Official guidance: IFRS issued standards
Assess interest and wages linked to a price index, public preference for non-monetary assets, shopping basket currency, and whether cumulative inflation over three years approaches or exceeds 100 percent.
Monitor the IAS 29.3 indicators each reporting period; apply IAS 29 from the beginning of the period in which hyperinflation is identified (IAS 29.4).
Official guidance: IFRS issued standards
On first application, restate comparatives as if the economy had always been hyperinflationary unless IAS 29 is impracticable for prior periods.
Fix the first-application date before restating opening balances and comparatives; IFRIC 7.3 requires restatement as if the economy had always been hyperinflationary.
Official guidance: IFRS issued standards
Use a general price index that reflects changes in general purchasing power; consumer or wholesale price indices are common when they cover the entity's transactions and are published reliably.
Select and document the general price index before performing restatement calculations (IAS 29.37); its identity and level must be disclosed under IAS 29.39(c).
Official guidance: IFRS issued standards
Monetary items are money held and assets or liabilities to receive or deliver fixed or determinable amounts of money; they are not restated but expose the entity to purchasing power gains or losses.
Complete the monetary versus non-monetary classification before restatement; it determines what is indexed and drives the IAS 29.9 monetary gain or loss.
Official guidance: IFRS issued standards
Items already stated at current amounts at the reporting date are not restated; only historical cost non-monetary items and equity components require indexation from acquisition or contribution dates.
Exclude items already measured at current amounts from indexation (IAS 29.14) and index only historical-cost balances from their acquisition dates (IAS 29.15).
Official guidance: IFRS issued standards
Restate share capital and reserves from the dates items were contributed or arose; reconcile restated retained earnings to the gain or loss on the net monetary position and other restatement adjustments.
Complete the equity restatement (IAS 29.24-25) and reconcile restated retained earnings to the IAS 29.9 net monetary gain or loss.
Official guidance: IFRS issued standards
The net monetary position equals monetary assets minus monetary liabilities; the restatement gain or loss reflects the erosion or benefit of holding net monetary liabilities or assets during inflation.
Calculate the gain or loss on the net monetary position and include it in profit or loss with separate disclosure (IAS 29.9; IAS 29.27-28).
Official guidance: IFRS issued standards
Revenue, expense, and other P&L items are restated from the dates they were initially recorded unless already linked to a price-level adjusted amount; average indices may be used for numerous similar transactions.
Restate income statement components using transaction-date or supportable average index factors to the reporting-date measuring unit (IAS 29.26).
Official guidance: IFRS issued standards
Cash flow statement amounts are restated using index factors from the dates cash flows occurred; the net monetary gain or loss is reconciled within financing or operating activities as appropriate.
Restate all cash flow statement components to the measuring unit current at the reporting date before publishing the complete set (IAS 29.33).
Official guidance: IFRS issued standards
Disclose that the financial statements are restated for hyperinflation, identify the general price index, and present current purchasing power amounts with reconciled comparatives.
Recognise the loss on the net monetary position in profit or loss (IAS 29.9) and provide the IAS 29.39 disclosures of the restatement, the index, and its level. Recognise the gain on the net monetary position in profit or loss (IAS 29.9) and provide the IAS 29.39 disclosures of the restatement, the index, and its level.
Official guidance: IFRS issued standards
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