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    Applying The Restatement Approach Under IAS 29 Financial Reporting in Hyperinflationary Economies

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    Issa Boy
    This document provides guidance on applying the requirements of IAS 29 when an entity identifies the existence of hyperinflation in its functional currency for the first time. It addresses how to restate non-monetary items and deferred tax items in the opening statement of financial position. The entity shall restate items from the date they were acquired or incurred until the end of the reporting period as if the economy had always been hyperinflationary.

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    Applying The Restatement Approach Under IAS 29 Financial Reporting in Hyperinflationary Economies

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    Issa Boy
    27 views6 pages
    This document provides guidance on applying the requirements of IAS 29 when an entity identifies the existence of hyperinflation in its functional currency for the first time. It addresses how to restate non-monetary items and deferred tax items in the opening statement of financial position. The entity shall restate items from the date they were acquired or incurred until the end of the reporting period as if the economy had always been hyperinflationary.

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    This document provides guidance on applying the requirements of IAS 29 when an entity identifies the existence of hyperinflation in its functional currency for the first time. It addresses how to restate non-monetary items and deferred tax items in the opening statement of financial position. The entity shall restate items from the date they were acquired or incurred until the end of the reporting period as if the economy had always been hyperinflationary.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    27 views6 pages

    Applying The Restatement Approach Under IAS 29 Financial Reporting in Hyperinflationary Economies

    Uploaded by

    Issa Boy
    This document provides guidance on applying the requirements of IAS 29 when an entity identifies the existence of hyperinflation in its functional currency for the first time. It addresses how to restate non-monetary items and deferred tax items in the opening statement of financial position. The entity shall restate items from the date they were acquired or incurred until the end of the reporting period as if the economy had always been hyperinflationary.

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    © All Rights Reserved
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    of 6

    IFRIC 7

    IFRIC 7

    Applying the Restatement Approach


    under IAS 29 Financial Reporting in
    Hyperinflationary Economies
    In November 2005 the International Accounting Standards Board issued IFRIC 7 Applying
    the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies. It was
    developed by the Interpretations Committee.

    © IFRS Foundation A1601


    IFRIC 7

    CONTENTS
    from paragraph

    IFRIC INTERPRETATION 7
    APPLYING THE RESTATEMENT APPROACH UNDER IAS 29
    FINANCIAL REPORTING IN HYPERINFLATIONARY
    ECONOMIES
    REFERENCES
    BACKGROUND 1
    ISSUES 2
    CONSENSUS 3
    EFFECTIVE DATE 6

    FOR THE ACCOMPANYING GUIDANCE LISTED BELOW, SEE PART B OF THIS EDITION

    ILLUSTRATIVE EXAMPLE

    FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION

    BASIS FOR CONCLUSIONS

    A1602 © IFRS Foundation


    IFRIC 7

    IFRIC Interpretation 7 Applying the Restatement Approach under IAS 29 Financial Reporting in
    Hyperinflationary Economies (IFRIC 7) is set out in paragraphs 1–6. IFRIC 7 is accompanied
    by an illustrative example and a Basis for Conclusions. The scope and authority of
    Interpretations are set out in the Preface to IFRS Standards.

    © IFRS Foundation A1603


    IFRIC 7

    IFRIC Interpretation 7
    Applying the Restatement Approach under IAS 29 Financial
    Reporting in Hyperinflationary Economies

    References
    • IAS 12 Income Taxes

    • IAS 29 Financial Reporting in Hyperinflationary Economies

    Background
    1 This Interpretation provides guidance on how to apply the requirements of
    IAS 29 in a reporting period in which an entity identifies1 the existence of
    hyperinflation in the economy of its functional currency, when that economy
    was not hyperinflationary in the prior period, and the entity therefore restates
    its financial statements in accordance with IAS 29.

    Issues
    2 The questions addressed in this Interpretation are:

    (a) how should the requirement ‘… stated in terms of the measuring unit
    current at the end of the reporting period’ in paragraph 8 of IAS 29 be
    interpreted when an entity applies the Standard?

    (b) how should an entity account for opening deferred tax items in its
    restated financial statements?

    Consensus
    3 In the reporting period in which an entity identifies the existence of
    hyperinflation in the economy of its functional currency, not having been
    hyperinflationary in the prior period, the entity shall apply the requirements
    of IAS 29 as if the economy had always been hyperinflationary. Therefore, in
    relation to non‑monetary items measured at historical cost, the entity’s
    opening statement of financial position at the beginning of the earliest period
    presented in the financial statements shall be restated to reflect the effect of
    inflation from the date the assets were acquired and the liabilities were
    incurred or assumed until the end of the reporting period. For non‑monetary
    items carried in the opening statement of financial position at amounts
    current at dates other than those of acquisition or incurrence, that
    restatement shall reflect instead the effect of inflation from the dates those
    carrying amounts were determined until the end of the reporting period.

    1 The identification of hyperinflation is based on the entity’s judgement of the criteria in


    paragraph 3 of IAS 29.

    A1604 © IFRS Foundation


    IFRIC 7

    4 At the end of the reporting period, deferred tax items are recognised and
    measured in accordance with IAS 12. However, the deferred tax figures in the
    opening statement of financial position for the reporting period shall be
    determined as follows:

    (a) the entity remeasures the deferred tax items in accordance with IAS 12
    after it has restated the nominal carrying amounts of its non‑monetary
    items at the date of the opening statement of financial position of the
    reporting period by applying the measuring unit at that date.

    (b) the deferred tax items remeasured in accordance with (a) are restated
    for the change in the measuring unit from the date of the opening
    statement of financial position of the reporting period to the end of
    that reporting period.

    The entity applies the approach in (a) and (b) in restating the deferred tax
    items in the opening statement of financial position of any comparative
    periods presented in the restated financial statements for the reporting period
    in which the entity applies IAS 29.

    5 After an entity has restated its financial statements, all corresponding figures
    in the financial statements for a subsequent reporting period, including
    deferred tax items, are restated by applying the change in the measuring unit
    for that subsequent reporting period only to the restated financial statements
    for the previous reporting period.

    Effective date
    6 An entity shall apply this Interpretation for annual periods beginning on or
    after 1 March 2006. Earlier application is encouraged. If an entity applies this
    Interpretation to financial statements for a period beginning before 1 March
    2006, it shall disclose that fact.

    © IFRS Foundation A1605

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