IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

Chapter 22/ Financial Reporting in Hyperinflationary Economies (lAS 29)

213

Solution

In ?lQtis 1,800

Property, plant. and equipment (900 x 300/ 150) Inventory (300/270) x 2.700 Cash

3,000 ----l2ll aiso 1,200 2.750 500 -.1QQ ~

Share capital (30011 00 x 400) Retained earnings (balance) Noncurrent liabilities Current liabilities

The inventory had been restated assuming that the index has increased proportionately over time. The loan is a monetary item and therefore is not restated. If the loan had been index linked, then it would have been restated in accordance with the loan agreement. 8. DISCLOSURE 8.1 Thi s information has to be discl osed under lAS 29: (a) That the financial statements and other corresponding peri od dat a have been restated for changes in the general purchasing power of the reporting currency (b) The basis on which the financial statements are prepared, that is, based on historical cost or current cost approach (c) The nature and level of the price index at the balance sheet date and any movements on this index in the current and previous reporting period 8.2 IFRIC 7, Applying the Restatement Approach under lAS 29. "Financial Reporting in Hyper– inflationary Economies, " state s that in the per iod in which the economy of an entity's functional currency becomes hyperinflationary, the entity shall app ly the requirements of lAS 29 as if the economy had always been hyperinflati on ary. The effect is that restatements of nonmonetary items carried at historical cost are made from the dates they were fir st recognized; for other non -mone– tary item s the restatements are made from the dates of the revised current value s. Deferred tax items are remeasured in accordance with lAS 12 after restating the nom inal carrying amounts of the nonmonetary items in the opening bal anc e shee t by appl yin g the measurin g unit at that date. Th ese items are restated for the change in the measuring unit from the date of the opening ba lance shee t to the date of the closing balanc e sheet.