When the functional currency is the currency of a hyperinflationary economy?
IAS 29 applies to any entity whose functional currency is the currency of a hyperinflationary economy. Hyperinflation is indicated by factors such as prices, interest and wages linked to a price index, and cumulative inflation over three years of around 100 per cent or more.
When an economy ceases to be hyperinflationary what should be done to the carrying values of the assets and liabilities?
When an economy ceases to be hyperinflationary and an entity discontinues the preparation and presentation of financial statements prepared in accordance with IAS 29, it treats 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 …
When monetary assets exceed monetary liabilities in a hyperinflationary economy the result would be?
Where monetary assets exceed liabilities, there will be a monetary loss, per IAS29 para 27. Gains or losses on the net monetary position should be recognised in profit or loss, per IAS29 para 9.
Which of the following cases is the economy most likely considered a hyperinflationary economy?
Hyperinflationary economies for the year-ended 31 December 2020
| Country | 3-year cumulative inflation ** |
|---|---|
| Argentina | No data available |
| Iran | 102.7% |
| Lebanon | 93.0% |
| South Sudan | 161.8% |
When restating the financial statements of an entity reporting under an inflationary environment the gain or loss on the net monetary position shall be?
9The gain or loss on the net monetary position shall be included in profit or loss and separately disclosed.
When restating the financial statements of an entity reporting under hyperinflationary environment the gain or loss on the net monetary position shall be?
9The gain or loss on the net monetary position shall be included in profit or loss and separately disclosed. 10The restatement of financial statements in accordance with this Standard requires the application of certain procedures as well as judgement.
Is UK a hyperinflationary economy?
At the moment, the UK has certainly suffered a severe supply shock, but coronavirus has imposed a demand shock to match. And when demand comes back, there is very little to stop supply from rising to meet it. So the good news is that hyperinflation in the UK seems highly unlikely.
Is South Africa a hyperinflationary economy?
Generally, it is agreed that a period of hyperinflation commences when the inflation rate rises above 50% a month. To put the 50%-rule per month in perspective: The inflation rate for South Africa was 2.1% in May 2021 and it increases to 3.2% in July 2021. Both figures mainly due to the effect of the Covid-19 pandemic.
When does hyperinflationary accounting begin under IFRS?
For example, let’s assume that hyperinflation is identified in Argentina in the fourth quarter of 2017 under both IFRS and US GAAP. Hyperinflationary accounting would apply for all of 2017 and comparative periods under IFRS, whereas it would only begin for US GAAP in the first quarter of 2018.
Is your foreign operation in a (potentially) hyperinflationary economy?
This is particularly challenging when the foreign operation is in a (potentially) hyperinflationary economy, for two main reasons. The assessment of whether or not the economy is hyperinflationary requires significant judgment, and it is often difficult to obtain stable and reliable inflation data from stressed economies to perform the analysis.
Do dual reporters with foreign operations in a hyperinflationary economy face CompLexity?
Dual reporters with foreign operations in a hyperinflationary economy face further complexity. IFRS and US GAAP have different accounting models for hyperinflationary economies that create GAAP differences in the numbers reported.
How is comparative information expressed in a hyperinflationary environment?
In a hyperinflationary environment, financial statements, including comparative information, must be expressed in units of the functional currency current as at the end of the reporting period. Restatement to current units of currency is made using the change in a general price index.