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Thread: 18 - Indian Accounting Standard (Ind AS) 29 - Financial Reporting in Hyperinflationary Economies

  1. #11
    IND-AS
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    Thumbs up Statement of cash flows of Indian Accounting Standard (Ind AS) 29 - Financial Reporting in Hyperinflationary Economies

    Statement of cash flows of Indian Accounting Standard (Ind AS) 29

    Financial Reporting in Hyperinflationary Economies


    Statement of cash flows

    33. This Standard requires that all items in the statement of cash flows are expressed in terms of the measuring unit current at the end of the reporting period.


  2. #12
    IND-AS
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    Thumbs up Corresponding figures of Indian Accounting Standard (Ind AS) 29 - Financial Reporting in Hyperinflationary Economies

    Corresponding figures of Indian Accounting Standard (Ind AS) 29

    Financial Reporting in Hyperinflationary Economies


    Corresponding figures

    34. Corresponding figures for the previous reporting period, whether they were based on a historical cost approach or a current cost approach, are restated by applying a general price index so that the comparative financial statements are presented in terms of the measuring unit current at the end of the reporting period. Information that is disclosed in respect of earlier periods is also expressed in terms of the measuring unit current at the end of the reporting period. For the purpose of presenting comparative amounts in a different presentation currency, paragraphs 42(b) and 43 of Ind AS 21 apply.


  3. #13
    IND-AS
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    Thumbs up Consolidated financial statements of Indian Accounting Standard (Ind AS) 29 - Financial Reporting in Hyperinflationary Economies

    Consolidated financial statements of Indian Accounting Standard (Ind AS) 29

    Financial Reporting in Hyperinflationary Economies



    Consolidated financial statements

    35. A parent that reports in the currency of a hyperinflationary economy may have subsidiaries that also report in the currencies of hyperinflationary economies. The financial statements of any such subsidiary need to be restated by applying a general price index of the country in whose currency it reports before they are included in the consolidated financial statements issued by its parent. Where such a subsidiary is a foreign subsidiary, its restated financial statements are translated at closing rates. The financial statements of subsidiaries that do not report in the currencies of hyperinflationary economies are dealt with in accordance with Ind AS 21.

    36. If financial statements with different ends of the reporting periods are consolidated, all items, whether non -monetary or monetary, need to be restated into the measuring unit current at the date of the consolidated financial statements.


  4. #14
    IND-AS
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    Thumbs up Selection and use of the general price index of Indian Accounting Standard (Ind AS) 29 - Financial Reporting in Hyperinflationary Economies

    Selection and use of the general price index of Indian Accounting Standard (Ind AS) 29

    Financial Reporting in Hyperinflationary Economies


    Selection and use of the 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. It is preferable that all entities that report in the currency of the same economy use the same index.

  5. #15
    IND-AS
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    Thumbs up Economies ceasing to be hyperinflationary of Indian Accounting Standard (Ind AS) 29 - Financial Reporting in Hyperinflationary Economies

    Economies ceasing to be hyperinflationary of Indian Accounting Standard (Ind AS) 29

    Financial Reporting in Hyperinflationary Economies


    Economies ceasing to be hyperinflationary

    38. When an economy ceases to be hyperinflationary and an entity discontinues the preparation and presentation of financial statements prepared in accordance with this Standard, it shall treat 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 subsequent financial statements.


  6. #16
    IND-AS
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    Thumbs up Disclosures of Indian Accounting Standard (Ind AS) 29 - Financial Reporting in Hyperinflationary Economies

    Disclosures of Indian Accounting Standard (Ind AS) 29

    Financial Reporting in Hyperinflationary Economies



    Disclosures


    39. The following disclosures shall be made:

    (a) the fact that the financial statements and the corresponding figures for previous periods have been restated for the changes in the general purchasing power of the functional currency and, as a result, are stated in terms of the measuring unit current at the end of the reporting period;
    (b) whether the financial statements are based on a historical cost approach or a current cost approach; and
    (c) the identity and level of the price index at the end of the reporting period and the movement in the index during the current and the previous reporting period.
    (d) the duration of the hyperinflationary situation existing in the economy.

    40. The disclosures required by this Standard are needed to make clear the basis of dealing with the effects of inflation in the financial statements. They are also intended to provide other information necessary to understand that basis and the resulting amounts.


  7. #17
    IND-AS
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    Thumbs up Appendix - A of Indian Accounting Standard (Ind AS) 29 - Financial Reporting in Hyperinflationary Economies

    Appendix - A of Indian Accounting Standard (Ind AS) 29

    Financial Reporting in Hyperinflationary Economies

    Appendix - A

    Applying the Restatement Approach under Ind AS 29 Financial Reporting in Hyperinflationary Economies


    This Appendix is an integral part of the Indian Accounting Standard (Ind AS) 29, Financial Reporting in Hyperinflationary Economies


    Background

    1. This Appendix provides guidance on how to apply the requirements of Ind AS 29 in a reporting period in which an entity identifies • 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 Ind AS 29.

    Issues

    2. The questions addressed in this Appendix 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 Ind AS 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?

    Accounting Treatment

    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 Ind AS 29 as if the economy had always been hyperinflationary. Therefor e, in relation to non-monetary items measured at historical cost, the entity’s opening balance sheet 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 balance sheet 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.

    4. At the end of the reporting period, deferred tax items are recognised and measured in accordance with Ind AS 12. However, the deferred tax figures in the opening balance sheet for the reporting period shall be determined as follows:

    (a) the entity remeasures the deferred tax items in accordance with Ind AS 12 after it has restated the nominal carrying amounts of its non - monetary items at the date of the opening balance sheet 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 balance sheet 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 balance sheet of any comparative periods presented in the restated financial statements for the reporting period in which the entity applies Ind AS 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.



  8. #18
    IND-AS
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    Thumbs up Illustrative example of Indian Accounting Standard (Ind AS) 29 - Financial Reporting in Hyperinflationary Economies

    Illustrative example of Indian Accounting Standard (Ind AS) 29


    Financial Reporting in Hyperinflationary Economies



    Illustrative example

    This example accompanies, but is not part of, Appendix A.

    IE1. This example illustrates the restatement of deferred tax items when an entity restates for the effects of inflation under Ind AS 29 Financial Reporting in Hyperinflationary Economies. As the example is intended only to illustrate the mechanics of the restatement approach in Ind AS 29 for deferred tax items, it does not illustrate an entity’s complete financial statements.


    For Illustrative examples you Can download this in pdf format


    Attached Files Attached Files

  9. #19
    IND-AS
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    Thumbs up Appendix - 1 of Indian Accounting Standard (Ind AS) 29 - Financial Reporting in Hyperinflationary Economies

    Appendix - 1 of Indian Accounting Standard (Ind AS) 29


    Financial Reporting in Hyperinflationary Economies



    Appendix - 1

    Note: This Appendix is not a part of the proposed Indian Accounting Standard (Ind AS) 29, Financial Reporting in Hyperinflationary Economies. The purpose of this Appendix is only to bring out the differences between the this Indian Accounting Standard and corresponding International Accounting Standard IAS 29, Financial Reporting in Hyperinflationary Economies.

    Comparison with IAS 29, Financial Reporting in Hyperinflationary Economies

    1. Ind AS 29 requires an additional disclosure regarding the duration of the hyperinflationary situation existing in the economy as compared to IAS 29.

    2. Paragraph number 23 appears as ‘Deleted ‘in IAS 29. In order to maintain consistency with paragraph numbers of IAS 29, the paragraph number is retained in Ind AS 29.

    3. Different terminology is used in this standard, e.g., term ‘balance sheet’ is used instead of ‘Statement of financial position’ and ‘Statement of profit and loss is used instead of ‘Statement of comprehensive income’.


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