Which companies should practice inflation accounting?

IAS 29 defines no precise rate for hyperinflation. When to adjust financial statements in line with this Standard is a matter of discretion. Hyperinflation is determined by a country's economic characteristics, including, but not limited to, the following: (TMS 29.3)

(a) The majority of the population prefers to hold their wealth in non-monetary assets or in a relatively stable foreign currency. The local currency held is immediately invested, etc., to maintain its purchasing power;

(b) The majority of the population does not consider monetary amounts in the local currency but in a relatively stable foreign currency. Prices can also be determined in this currency;

(c) Prices for credit sales and purchases are determined to cover expected losses in purchasing power over the credit period, even if the period is short;

(d) Interest rates, wages and prices are linked to a “price index” and

(e) The cumulative inflation rate for the last three years nears or exceeds 100%.

All businesses that report in the currency of the same hyperinflationary economy are to apply this Standard, starting from the same date. This Standard applies to the financial statements of all businesses from the beginning of the reporting period in which hyperinflation is identified in the country of the reporting currency (IAS 29.4).