IFRIC 7 Approach under IAS 29 Financial Reporting in Hyperinflationary Economies (Issued February 2006)

IFRS Guide > IFRIC 7

Restatements of Financial Reporting in Hyper inflationary Economies

The International Financial Reporting Interpretations Committee (IFRIC) issued IFRIC 7, “Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies” to make it more clear what IAS 29 required. Specifically, it was made to address two issues that constituents had raised with the IFRIC:

1. How to restate comparative financials when an entity identifies hyperinflation in the economy. Specifically the currency in which its financial statements are measured, termed its functional currency
and
2. How to restate deferred tax items in the opening balance sheet.

This Interpretation provides companies that operate in economies in hyperinflation, and entities facing that potential future. Because inflation can strike at any time and no country can claim to be completely immune, having this guidance makes sense.

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