Wiecek and Young IFRS Primer Chapter 36

Slides:



Advertisements
Similar presentations
I NFLATION A DJUSTMENT By R.Sivanesh Blog:
Advertisements

International Accounting for Price Changes
© 2009 Clarence Byrd Inc.1 Chapter 10 Translation Of Foreign Currency Financial Statements.
– Prepared By – Rajat Dua. Objectives  Basis of presentation of Financial Statements  Comparability  To setout the framework for preparation of financial.
Intermediate Accounting I - Fall Session 3 Accounting Assumptions and Principles Balance Sheet Wrap-up The Complete Income Statement Separately.
Chapter 3 Measuring Performance. Cash versus Accrual Cash is basically a checking account method  Cash in and cash out  Statement of cash flows  Less.
Analysis of Multinational Operations Chapter 17 Robinson, Munter and Grant.
1 Matakuliah: F0142/Akuntansi Internasional Tahun: 2006 Session 07 Financial Reporting and Changing Prices.
Translation of Foreign Financial Statements. C112 Foreign currency translation uThe process of expressing amounts denominated or measured in foreign currencies.
Chapter 13: Accounting for Inflation & Changing Prices Inflation Price indexes Inflation accounting Income measurement systems SFAS No. 33.
Translation Exposure (or chapter 10).
Measuring Accounting Exposure
International Accounting and Financial Reporting Summer 2007 William F. O’Brien, MBA, CPA.
Session VII & VIII Foreign Currency. INTERNATIONAL ACCOUNTING & FINANCIAL REPORTING Foreign Exchange Basics n Exchange rates n Conversion values.
1 SCOPE FOREIGN CURRENCY TRANSACTIONS AND BALANCES EXCEPT DERIVATIVES WITHIN THE SCOPE OF IAS 39 & IFRS9 TRANSLATING THE RESULTS AND FINANCIAL POSITION.
Advanced Financial Accounting: Chapter 7
HKAS 21 Effects of Changes in Foreign Exchange Rates
Accounting for Government Grants and Disclosure of Government Assistance: IAS 20 Wiecek and Young IFRS Primer Chapter 14.
©The McGraw-Hill Companies, Inc. 2006McGraw-Hill/Irwin Chapter 12 Translation of Foreign Currency Financial Statements.
IMPAIRMENT OF ASSETS. DEFINITIONS NOT SAME IAS 36 was reissued in March 2004 and applies to goodwill and intangible assets acquired in business combinations.
Translation of Foreign Currency Financial Statements
Chapter 8: Translation of Foreign Currency Financial Statements
Accounting for Foreign Currency
Accounting for Foreign Currency
McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 4 International Financial Reporting Standards (IFRSs)
FOREIGN CURRENCY TRANSLATION
The Measurement Fundamentals of Financial Accounting Presentations for Chapter 3 by Glenn Owen.
ACCOUNTING FOR COMPANY STATEMENT OF FINANCIAL POSITION (ASSETS)
Accounting 4570/5570 Chapter 11 - International Accounting for Price Changes.
Property, Plant and Equipment
McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 7 Translation of Foreign Currency Financial Statements.
Financial Statements and Accounting Transactions More of C H A P T E R
International Accounting, 6/e
McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 4 Translation of Foreign Currency Financial Statements.
CHAPTER 5 INCOME CONCEPTS. The Purpose of Income Reporting 1Income is used as the basis of one of the principal forms of taxation. 2Income is used in.
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Connolly – International Financial Accounting and Reporting – 4 th Edition CHAPTER 31 FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES.
Convergence with IFRS in Latin America June 2007.
Inflation accounting Inflation accounting is a term describing a range of accounting systems designed to correct problems arising from historical cost.
Specialized Industries and Hyperinflation: IFRS 4, IAS 26, and IAS 29 Wiecek and Young IFRS Primer Chapter 36.
The Effects of Changes in Foreign Exchange Rates: IAS 21
IAS 21 The Effects of Changes in Foreign Exchange Rates.
FINANCIAL STATEMENTS BALANCE SHEET.
1 OUTLINE FOR CHAPTER 11 Understand Translation Exposure –How does translation exposure arise? –Definition –How do the Current and Temporal Methods work?
CHAPTER Translation of Foreign Financial Statements Fundamentals of Advanced Accounting 1 st Edition Fischer, Taylor, and Cheng 7 7.
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Eight Translation of Foreign Currency Financial Statements.
Ind AS-2 INVENTORIES by CA, D.S.RAWAT Partner, BANSAL & Co.
Chapter 11 Translation of Foreign Financial Statements.
Chapter 11 Slide 1 Introduction Translation and Consolidation of Foreign Operations.
1 Learning objectives After studying the material in this chapter you will be able to do the following: LO1 Explain the nature, purpose and importance.
Chapter 8 Accounting for Foreign Investments © 2013 Advanced Accounting, Canadian Edition by G. Fayerman.
Accounting (Basics) - Lecture 9 Foreign currency translation.
Chapter 5 Assets 1 Reporting losses and gains on revaluation 1.
Financial Reporting in hyperinflationary Economies (IAS 29) Jonathan Otieno Audit Manager - Mazars.
Copyright © 2010 Pearson Prentice Hall. All rights reserved. Chapter 13 Translation Exposure.
Foreign Subsidiaries A foreign subsidiary is consolidated if the parent company owns a controlling interest in the subsidiary Exceptions: The intent to.
Chapter 2 Asset and Liability Valuations and Income Recognition.
International Financial Accounting
International Accounting, 7/e
International Financial Reporting Standards (IFRSs)
International Accounting, 6/e
Translation of Foreign Currency Financial Statements
International Accounting, 7/e
Chapter 9: Additional Financial Reporting Issues
HISTORICAL DEVELOPMENT OF IAS 36
Accounting for Changes in Prices
OUTLINE FOR CHAPTER 11 Understand Translation Exposure
IMPAIRMENT OF ASSETS–IAS
Section 30 Foreign Currency Translation
International Developments in Accounting ACFI3217
Presentation transcript:

Wiecek and Young IFRS Primer Chapter 36 Hyperinflation: IAS 29 Wiecek and Young IFRS Primer Chapter 36

Part 3: IAS 29 – Objective and Scope Purpose sets out how an entity whose functional currency is the currency of a hyperinflationary economy should restate its financial statements Functional currency the currency of the primary economic environment in which entity operates Hyperinflation the standard indicates this is a matter of judgment IAS 29 does not pinpoint a specific rate Conditions that are characteristic of a hyperinflationary environment: • the country’s wealth is kept in non-monetary assets or in a stable currency • prices may be quoted in another more stable currency. • key economic variables are linked to a price index. • cumulative inflation over three years is high, at close to 100% or more

Part 3: IAS 29 – Restatement of Financial Statements An entity whose functional currency is the currency of a hyperinflationary economy must restate its current period financial statements in terms of the measuring unit at the end of the reporting period restate the comparative figures for the previous periods reported in the same way This requirement applies whether the entity uses a historical cost approach or a current cost approach on its primary statements Historical Cost Financial Statements Include some recognition of changing prices not the same thing as statements prepared on a current or replacement cost basis Specifics: restated items cannot be reported at amounts greater than their recoverable amount restated inventory is reduced to a lower net realizable value gain or loss on the entity’s net monetary position is included in profit or loss and is reported as a separate line item

Part 3: IAS 29 – Restatement

Part 3: IAS 29 – Restatement of Financial Statements Current Cost Financial Statements have been adjusted to reflect the effects of changes in the specific prices of assets held the adjustment process is different an item’s current cost or replacement cost at the balance sheet date is already expressed in a measuring unit that is current at the end of the period

Part 3: IAS 29 – Other Issues A variety of other items are addressed by this standard: • general price index reflects the changes in general purchasing power • differences between restated amounts and their carrying values in statement of financial position may give rise to deferred taxes • all items in statement of cash flows are expressed in terms of measuring unit current at the end of the reporting period • corresponding figures on comparative financial statements are restated in terms of the current period-end measuring unit • when an economy ceases to be hyperinflationary, entity uses amounts expressed in the measuring unit current at end of the last reporting period as beginning carrying amounts in its subsequent statements

Part 3: IAS 29 – Disclosures Disclosures are needed in restated financial statements so that the basis for dealing with the effects of inflation is clear and the results are understandable What does the entity need to report? that current and comparative financial statements have been restated for changes in the general purchasing power of the functional currency that statements are restated into the measuring unit current at the balance sheet date What does the entity need to identify? whether the statements restated were based on historic cost or current cost information about the general price levels and changes in them during the current and previous periods