IFRS – IAS 29: Financial reporting in hyperinflationary economies
The International Accounting Standards Committee (IASC) released International Accounting Standard 29 (IAS 29) to address the topic of financial reporting in hyper inflationary economies.
These are important standards because accounting is meant to convey the value in which companies hold and generate, if the home currency of a company is hyper inflationary, this means that the currency is constantly being devalued. Because of this, shareholders need to be informed of this so that they can make responsible decisions about investing in the company.
IAS are principles based standards, rather than strict rules based standards that govern international accounting. IAS standards differ from IFRS standards in that they were introduced prior to 2001, whereas IFRS were produced after this date by the IASB, or the International Accounting Standards Board. When determining the hierarchy of these, the IAS is considered to be the building blocks in which the newer and more relevant IFRS are founded and therefore IFRS is more authoritative when these conflict.
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