IAS - 29

Financial Reporting in
Hyperinflationary
Economies

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International Accounting Standard No 29 (IAS 29)

Financial reporting in hyperinflationary economies

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 Scope

1. This Standard applies to financial statements and consolidated financial

statements of an entity whose functional currency is the currency of a
hyperinflationary economy.

2. It is useful, in the midst of a hyperinflationary economy; present the results of operations

and financial position in the local currency, without subjecting them to a restatement
process. In such economies, the currency loses purchasing power at a rate such that
any comparison is misleading figures from transactions and other events at different
points in time, even within a year.

3. This Standard does not establish an absolute rate of inflation to consider that when
overcome, there is a state of hyperinflation. It is, rather, a problem of criteria to judge
when it becomes necessary to restate the financial statements in accordance with this
Standard. The state of hyperinflation is indicated by the characteristics of the country's
economic environment, which include, but are not limited to, the following:

(a) the general population prefers to keep its wealth in the form of non-monetary assets
or in a relatively stable foreign currency, while the amounts of local currency obtained
are immediately invested to maintain purchasing power of the latter;

(b) the general population does not take into consideration the monetary amounts in
local currency terms, but does so in terms of another currency relatively stable prices
can be set in this currency;

(c) sales and purchases on credit take place at prices that compensate for the expected
loss of purchasing power during the adjournment, even if the period is short;

(d) interest rates, wages and prices are linked to the evolution of a price index and

(e) the cumulative rate of inflation over three years approaches or exceeds 100%.

4. It is preferable that all entities that report in the currency of the same hyperinflationary
economy apply this Standard from the same date. Notwithstanding the foregoing, this
Standard is applicable to any entity's financial statements since the beginning of the year
in which they identified the existence of hyperinflation in the country whose currency
provides the information.

The restatement of financial statements

5. Prices, whether general or specific, change over time as a result of various economic
and social forces. The forces acting on the specific market for each product, such as
changes in supply and demand or technological change can cause significant increases
or decreases in prices, regardless of how the other prices. Moreover, the general causes
can result in a change in the general price level and therefore in the general purchasing
power of currency.

6. Entities financial statements prepared on historical cost accounting assumptions will in

this way, regardless of changes in the general price level or the higher prices of specific
assets or liabilities recognized. The exceptions to this are those assets and liabilities for

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 which the entity is required to assess the fair value or for which it chooses to do. For
example, tangible assets may be revalued to fair value of biological assets are usually
required to be valued at fair value. However, some organizations present their financial
statements based on current cost approach that reflects the effects of changes in
specific prices of assets owned.

7. In a hyperinflationary economy, financial statements, whether made under the historical

cost basis or at current cost, only useful if they are expressed in terms of units of
assessment to the current balance sheet date. Therefore, this Standard is applicable to
the financial statements of the entities that developed and presented in the currency of a
hyperinflationary economy. Not be submitting the information required by this Standard
as a supplement to restate financial statements without. Moreover, it discourages the
filing of separate financial statements prior to its restatement.

8. The financial statements of an entity whose functional currency is that of a

hyperinflationary economy, whether the method is based on historical cost or
current cost method, to be expressed in terms of the measuring unit current at the
date of closure the year under report. Both the comparative figures for the
previous year, as required by IAS 1 Presentation of Financial Statements (revised
2007) as information relating to prior periods, should also be expressed in terms
of the measuring unit current at the end of the year on to be reported. To present
comparative amounts in a different presentation currency shall apply paragraphs
42 (b) and 43 of IAS 21 - The Effects of changes in exchange rates of foreign
currency.

9. Losses or gains from the net monetary position should be included in income for
the year, revealing this information in a separate.

10. The restatement of financial statements in accordance with this Standard requires the
application of certain principles, as well as trials to make them work. The uniform
application of such principles and judgments, from one year to another is more important
than the accuracy of the figures that as a result of the restatement, to appear in the
financial statements.

Financial statements at historical cost

Statement of financial position

11. The figures in balance yet in terms of the current unit value at the balance sheet date are
applied restate a general price index.

12. Monetary items are not restated because they are expressed in the current unit value at
the balance sheet date. Monetary items are cash balances held and to receive or pay
cash.

13. Assets and liabilities linked by agreement or agreements, changes in prices, such as
indexed bonds or loans, are adjusted according to the agreement or convention to
express the amount outstanding at the balance sheet date. These items are recorded in
the restated balance sheet for the amount calculated in this way.

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14. All other assets and liabilities are non-monetary. Some non-monetary values shall be
recorded in the current year-end reporting, such as the net realizable value or fair value,
so no need restated. All other assets and liabilities are restated.

15. Most non-monetary assets are recorded at cost or at cost less depreciation and
therefore are expressed at amounts current at their date of acquisition. The cost of each
item restated, or cost less depreciation, is defined by its historical cost and accumulated
depreciation, the change of a general price index from the date of acquisition until the
end of the period under report. For example, tangible assets, stocks of raw materials and
goods, goodwill, patents, trademarks and other similar assets, will restate from the date
of acquisition. The inventory of ongoing and finished products will restate from the date
you incurred the costs of buying and processing.

16. The records of the dates of acquisition of the elements of the tangible assets are not
available, and sometimes it is not feasible to estimate. In such circumstances it may be
necessary, for the first year of implementation of this Standard, to use an independent
valuation of a professional respect of such items and to serve as a basis for their
restatement.

17. May not be available a general price index refers to the period for which, according to
this standard will require the restatement of tangible fixed assets. In such circumstances,
it may be necessary to use an estimate based, for example, movements in the exchange
rate between the functional currency and a relatively stable foreign currency.

18. Some non-monetary items are carried as current values at different times than the stock
or the acquisition, for example, this can occur when the components of tangible assets
were revalued at a previous date. In such cases, the books will restate amounts from the
date of revaluation.

19. When the restated amount of a non-monetary exceeds its recoverable amount is
reduced according to the appropriate standards and interpretations. For example, the
restated amount of tangible fixed assets, goodwill, patents and trademarks will be
reduced to its recoverable amount and the amounts restated for the stock is reduced to
its net realizable value

20. An enterprise which is counted by the method of participation, you can report in the
currency of a hyperinflationary economy. The statement of financial position and status
of the overall result of this is shared according to restate this rule to calculate the
investor's participation in its net assets and results. Where the restated financial
statements of the investee are in a foreign currency are converted using the exchange
rates of closure.

21. Generally, the impact of inflation is recognized in the financial costs of borrowing. It is
not appropriate to proceed simultaneously to restate disbursements for investments
financed with loans and, simultaneously, capitalizing on the part of the financial costs
that compensates the lender for inflation in that period. This part of the financial cost is
recognized as an expense in the year incurred in the same.

22. An entity may acquire assets through an agreement allowing it to defer payments,
without explicitly accounting for a charge for interest. When it is not possible to separate
the amount of implicit interest, such assets would restate using dates of payment and

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 not acquisition.

23. [Deleted]

24. At the beginning of the first year of implementation of this Standard, the components of
equity, except retained earnings and reserves for revaluation of assets, restate applying
a general price index to the various items, from the dates on which were made, or from
the time they came in any other way. For its part, any revaluation surplus that arose
before will be removed and the amounts of retained earnings will be determined based
on the remaining items, as restated, of the balance sheet.

25. At the end of the first year of implementation and in subsequent years, it shall restate all
the components of net assets by applying a general price index to the items since the
beginning of the period or since the date of contribution, if later. The movements during
the exercise, in equity are presented in accordance with IAS 1.

Income Statement

26. This standard requires that all items in the income statement are expressed in the
monetary unit current at the balance sheet date. For this reason, all amounts need to be
restated by using the variation experienced by the general price index from the date on
which income and expenditures were initially recorded.
Losses and gains from net monetary position

27. Over a period of inflation, any entity that maintains an excess of monetary liabilities over
monetary assets, lost purchasing power, and any entity that maintains an excess of
monetary liabilities over monetary assets, gain purchasing power, provided that such
items are not subject to a price index. These gains or losses arising from the net
monetary position may be determined as the algebraic sum, considering this is the sign
of the quantities of all adjustments made for restatement of items for non-monetary
assets, equity, the state of the overall result and corrections of the assets and liabilities
indexed. This gain or loss can be estimated also by applying the change in the overall
index price to the weighted average for the year, the difference between monetary
assets and liabilities.

28. The loss or gain resulting from net monetary position is included in income for the year.
The adjustment in assets and liabilities indexed in accordance with paragraph 13 is
offset by the gain or loss from net monetary position. Other income and expenses, such
as income and expenses and exchange differences on foreign currency related to
money lent or borrowed, are also associated with the net monetary position. Although
these items are disclosed separately can be useful for presenting clustered with the gain
or loss from net monetary position in the state of the overall result.

Financial statements at current cost

Statement of financial position

29. Items valued at current cost are not subject to restatement because they are already
valued in terms of unit value in the current balance sheet date. Other BSIs restate as set
out in paragraphs 11 to 25.

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 Income Statement

30. Generally, the income statement shows the current cost to current cost of items in the
time the relevant transactions and events occurred. The cost of sales and depreciation
costs are recorded as current at the time of consumption, sales and other expenses are
recognized for their monetary amounts to be carried out. Therefore, all these items need
to be restated in terms of the current unit value at the balance sheet date, and this is
done by applying a general price index.

Losses and gains from net monetary position

31. Gains and losses resulting from net monetary position is calculated and presented in
accordance with paragraphs 27 and 28.

Income taxes

32. The restatement of financial statements in accordance with this rule may result in
differences between the carrying amount of individual assets and liabilities on the
balance sheet and the corresponding tax bases. These differences are accounted for in
accordance with IAS 12 Income Taxes.

Statements of Cash Flows

33. This Standard requires all items of the cash flow statement is restating the unit in terms
of current valuation at the balance sheet date.

Figures for previous years

34. The figures for items from the previous year, and are based on the method of historical
cost or current cost, it shall restate applying a general price index, so that the
comparative financial statements are presented in terms of unit of measure current at
the end of the year under report. The information to be disclosed with respect to prior
periods is expressed in terms of the measuring unit current at the end of the year under
report. For the purpose of presenting comparative amounts in a different presentation
currency shall apply paragraphs 42 (b) and 43 of IAS 21.

Consolidated financial statements

35. A dominant company to report in the currency of a hyperinflationary economy may have
subsidiaries that also provide information on coins hyperinflationary economies. The
financial statements of such subsidiaries will need to be restated by applying a general
price index for the country in whose currency the information presented, before the
inclusion in the consolidated financial statements to be submitted by the parent. When
the dependent is foreign, its financial statements were converted using the exchange
rates of closure. The financial statements of subsidiaries that do not submit information
in currencies of hyperinflationary economies are treated for accounting purposes as set
out in IAS 21.

36. If financial statements are consolidated with the end of the exercises reported different,
every game, whether or not monetary, need to be restated in the drive current to the

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 valuation date of the consolidated financial statements.

Selection and use of a general price index

37. The restatement of financial statements in accordance with this Standard requires the
use of a general price index that reflects changes in general purchasing power of
currency. It is preferable that all entities to report in the currency of the same economy
use the same index.

Economies ceasing to be hyperinflationary

38. When an economy ceases to be hyperinflationary and the entity ceases to

preparing and presenting financial statements prepared in accordance with this
standard, you must treat the figures given in the current unit value at end of year
prior, as a basis for amounts of the items in its financial statements below.
Information Disclosure

39. will disclose the following information:

(a) the fact that the financial statements and the corresponding figures for prior
periods have been restated to consider changes in the general purchasing power
of the functional currency and that, as results are expressed in the measuring unit
current at the balance sheet date.

(b) whether the financial statements before restatement were prepared using the
historical cost or current cost, and

(c) identification and value of the general price index at the balance sheet date, the
movement of the same during the current and the previous one.

40. This Standard requires the disclosure of information necessary to make clear the basis
of treating the effects of inflation on the financial statements. Furthermore, it has been
attempting to provide the information necessary to understand these rules and the
resulting quantities.

Effective Date

41. This standard is effective for financial statements covering periods beginning on
or after January 1, 1990.

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