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AASB 129 - Financial Reporting in Hyperinflationary Economies

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Summary 
Developments, Key Differences & History 
Compared to IFRS 
Interpretations 
Rejection Notices 
Questions & Answers 
Articles 
AASB website 

 
Currency of material 
This material was last updated in September 2008.  
 
Overview 
AASB 129 Financial Reporting in Hyperinflationary Economies is equivalent to IAS 29 of the same name as issued by the International Accounting Standards Board. The objective of AASB 129 is to establish principles for financial reporting by entities whose functional currency is the currency of a hyperinflationary economy. It is applicable for annual reporting periods beginning on or after 1 January 2005. 
 
 
SUMMARY 
Main Requirements 
The main requirements of AASB 129 are: 
 
Application and scope (paragraphs Aus1.1-4)
  • AASB 129 applies to individual financial statements, including consolidated financial statements of any entity whose functional currency is the currency of a hyperinflationary economy.
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  • An economy is generally considered to be hyperinflationary when the cumulative inflation rate over three years approaches or exceeds 100%.
The restatement of financial statements (paragraphs 5-37)
  • The financial statements of an entity that reports in the currency of a hyperinflationary economy should be stated in terms of the measuring unit current at the reporting date.
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  • The measuring unit current at the reporting date must be based on the use of a general price index that reflects changes in general purchasing power.
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  • Comparative figures for prior period(s) must also be restated into the same current measuring unit.
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  • The gain or loss on the net monetary position from restatement must be included in the net income and separately disclosed.
Economies ceasing to be hyperinflationary (paragraph 38) 
When an economy is no longer hyperinflationary and the presentation of financial reports in accordance with AASB 129 is discontinued, the amounts expressed in the measuring unit current at the end of the previous reporting period is used as the basis for the carrying amounts in the subsequent financial statements. 
 
Disclosures (paragraphs 39-40) 
Include:
  • Fact that the financial statements have been restated for the changes in general purchasing power of the functional currency and are therefore stated in terms of the measuring uni current at the reporting date.
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  • Whether the financial statements are based on a historical cost approach or current cost approach.
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  • The identity and level of the price index at the reporting date and the movement in the index during the current and previous reporting period.
 
The information provided is a brief summary of the requirements of this standard and is not intended to be used as a substitute for reading the standard itself nor does it attempt to provide any interpretative advice. To apply the standard to their particular circumstances readers are encouraged to read the text of the standard and, if necessary, seek professional advice from a Chartered Accountant or other suitably qualified professional. The Institute expressly disclaims all liability for any loss or damage arising from reliance upon any information or inaccurate statement made in this summary.