What are some of the key issues with adjusting for inflation?

These are:

-        Preparing financial statements according to the applicable financial reporting framework (Tax Procedure Law, TAS/IFRS or LME-FRS);

-        Determining the accounting periods to which IAS 29 will be applied;

-        Identifying monetary and non-monetary items;

-        Identifying branches, subsidiaries, associates, joint ventures and business partnerships whose financial statements must be included in the process of adjusting for price indices;

-        Determining whether inflation accounting has been practiced in previous years and clarifying the date on which price indexation began;

-        Determining the indices to be used in the indexation phase;

-        Calculating the adjustment factors to be used in the indexation phase.

After the indexation process, the following should be done to the obtained indexed amounts:

-        In accordance with "TAS 36 Impairment of Assets", if the recoverable value of an indexed non-monetary asset is less than its indexed amount, the difference is shown as  “impairment loss” in profit and loss statement; and the carrying value of the asset is lowered to its recoverable value (TAS 29.16).

-        Non-monetary assets and/or liabilities which need to be shown at fair or net realizable value (i.e. assets that apply the re-valuation model for tangible and intangible assets in accordance with TAS 16 and stocks that need to be reported at cost or net realizable value as per IAS 2, whichever is lower) should be presented in financial statements at fair value or net realizable value and not at indexed values (TAS 29.16).