Exposure draft Translation to a Hyperinflationary Introduction Currency

An exposure draft (available here)

These proposals follow on from the discussions held by the IFRS Interpretations Committee (IFRS IC) in 2022 as to the accounting treatment to be applied by:

• a parent entity whose presentation currency is that of a hyperinflationary economy, when it consolidates a subsidiary whose functional currency is that of a non-hyperinflationary economy;

• an entity whose functional currency is that of a non-hyperinflationary economy, when it presents its financial statements in the currency of a hyperinflationary economy.

Recognising the existence of this problem in many jurisdictions, and the inadequacy of existing standards to address it, the Committee recommended the IASB to make narrow-scope amendments to IAS 21.

This exposure draft therefore proposes to clarify that:

• when an entity translates amounts from a functional currency that is the currency of a non-hyperinflationary economy to a presentation currency that is the currency of a hyperinflationary economy, it translates those amounts, including comparative amounts, using the closing rate at the date of the most recent statement of financial position; and

• an entity applying this translation method must disclose that fact and provide summary financial information on its foreign operations translated using this method.

The comments period runs until 22 November 2024.