222 / 488
Solution
Chapter
22/
Financial Reporting in Hyperinflationary Economies (lAS 29)
213
Share capital (30011 00 x 400)
Retained earnings (balance)
Noncurrent liabilities
Current liabilities
Property, plant. and equipment (900 x
300/ 150)
Inventory
(300/270)
x 2.700
Cash
In
?lQtis
1,800
3,000
----l2ll
aiso
1,200
2.750
500
-.1QQ
~
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.