Close Close

Life Health > Running Your Business

IASB Addresses Severe Hyperinflation

Your article was successfully shared with the contacts you provided.

The International Accounting Standards Board (IASB) has drafted an amendment that explains how companies in jurisdictions recovering from severe hyperinflation ought to handle financial reporting.

IASB, London, is exposing a hyperinflation amendment draft to the public. Comments on the draft are due Nov. 30.

The draft amendment would apply to entities that are subject to International Financial Reporting Standards (IFRS) but cannot comply because the currencies they use are affected by severe hyperinflation.

Once the severe hyperinflation eases, an entity could choose to “measure assets and liabilities at fair value and to use that fair value as the deemed cost in its opening IFRS statement of financial position because of severe hyperinflation,” according to the draft.

“The entity’s first IFRS financial statements shall disclose an explanation of how, and why, the entity had, and then ceased to have, a functional currency that has both of the following characteristics: (a) a reliable general price index is not available to all entities with transactions and balances in the currency” and “(b) exchangeability between the currency and a relatively stable foreign currency does not exist,” according to the draft.