Indian Accounting Standard (Ind AS) 29 Financial Reporting in Hyperinflationary Economies

Contents
SCOPE THE RESTATEME T O! !I A CIA" STATEME TS Historica& cost 'inancia& state(ents Balance sheet Statement of profit and loss Gain or loss on net monetary position Current cost 'inancia& state(ents Balance sheet Statement of profit and loss Gain or loss on net monetary position Ta*es State(ent o' cas+ '&o,s Corres-onding 'igures Conso&idated 'inancia& state(ents Se&ection and use o' t+e genera& -rice inde* ECO OMIES CEASI / TO 0E H1PERI !"ATIO AR1 2ISC"OS3RES

Paragraphs
14 #$% 112) 1125 26 2728 29$1 29 30 31 $2 $$ $4 $#$. $% $) $944

APPE 2ICES
A5 Applying the Restatement Approach under Ind AS 29 Financial Reporting in Hyperinflationary Economies

15 Co(-arison ,it+ IAS 296 Financial Reporting in Hyperinflationary Economies

Indian Accounting Standard (Ind AS) 29 Financial Reporting in Hyperinflationary Economies

(This Indian Accounting Standard includes paragraphs set in bold type and plain type, which have equal authority. Paragraphs in bold type indicate the main principles.)

Sco-e
1 T+is Standard s+a&& 7e a--&ied to t+e 'inancia& state(ents6 inc&uding t+e conso&idated 'inancia& state(ents6 o' an8 entit8 ,+ose 'unctiona& currenc8 is t+e currenc8 o' a +8-erin'&ationar8 econo(85 2 In a hyperinflationary economy reportin! of operatin! res"lts and financial position in the local c"rrency #itho"t restatement is not "sef"l$ %oney loses p"rchasin! po#er at s"ch a rate that comparison of amo"nts from transactions and other e&ents that ha&e occ"rred at different times e&en #ithin the same acco"ntin! period is misleadin!$ 'his Standard does not esta(lish an a(sol"te rate at #hich hyperinflation is deemed to arise$ It is a matter of )"d!ement #hen restatement of financial statements in accordance #ith this Standard (ecomes necessary$ *yperinflation is indicated (y characteristics of the economic en&ironment of a co"ntry #hich incl"de ("t are not limited to the follo#in!+

,a-

the !eneral pop"lation prefers to .eep its #ealth in non/monetary assets or in a relati&ely sta(le forei!n c"rrency$ 0mo"nts of local c"rrency held are immediately in&ested to maintain p"rchasin! po#er1 the !eneral pop"lation re!ards monetary amo"nts not in terms of the local c"rrency ("t in terms of a relati&ely sta(le forei!n c"rrency$ 2rices may (e 3"oted in that c"rrency1 sales and p"rchases on credit ta.e place at prices that compensate for the e4pected loss of p"rchasin! po#er d"rin! the credit period e&en if the period is short1 interest rates #a!es and prices are lin.ed to a price inde41 and the c"m"lati&e inflation rate o&er three years is approachin! or e4ceeds 1005$

,(-

,c-

,d,e-

It is prefera(le that all entities that report in the c"rrency of the same hyperinflationary economy apply this Standard from the same date$ 7e&ertheless this Standard applies to the financial statements of any entity from the (e!innin! of the reportin! period in #hich it identifies the e4istence of hyperinflation in the co"ntry in #hose c"rrency it reports$

T+e restate(ent o' 'inancia& state(ents

5 2rices chan!e o&er time as the res"lt of &ario"s specific or !eneral political economic and social forces$ Specific forces s"ch as chan!es in s"pply and demand and technolo!ical chan!es may ca"se indi&id"al prices to increase or decrease si!nificantly and independently of each other$ In addition !eneral forces may res"lt in chan!es in the !eneral le&el of prices and therefore in the !eneral p"rchasin! po#er of money$ 8ntities that prepare financial statements on the historical cost (asis of acco"ntin! do so #itho"t re!ard either to chan!es in the !eneral le&el of prices or to increases in specific prices of reco!nised assets or lia(ilities$ 'he e4ceptions to this are those assets and lia(ilities that the entity is re3"ired or chooses to meas"re at fair &al"e$ 9or e4ample property plant and e3"ipment may (e re&al"ed to fair &al"e and (iolo!ical assets are !enerally re3"ired to (e meas"red at fair &al"e$ Some entities ho#e&er present financial statements that are (ased on a c"rrent cost approach that reflects the effects of chan!es in the specific prices of assets held$ In a hyperinflationary economy financial statements #hether they are (ased on a historical cost approach or a c"rrent cost approach are "sef"l only if they are e4pressed in terms of the meas"rin! "nit c"rrent at the end of the reportin! period$ 0s a res"lt this Standard applies to the financial statements of entities reportin! in the c"rrency of a hyperinflationary economy$ 2resentation of the information re3"ired (y this Standard as a s"pplement to "nrestated financial statements is not permitted$ 9"rthermore separate presentation of the financial statements (efore restatement is disco"ra!ed$ T+e 'inancia& state(ents o' an entit8 ,+ose 'unctiona& currenc8 is t+e currenc8 o' a +8-erin'&ationar8 econo(86 ,+et+er t+e8 are 7ased on a +istorica& cost a--roac+ or a current cost a--roac+6 s+a&& 7e stated in ter(s o' t+e (easuring unit current at t+e end o' t+e re-orting -eriod5 T+e corres-onding 'igures 'or t+e -re9ious -eriod re:uired 78 Ind AS 1 6 Presentation of Financial Statements and an8 in'or(ation in res-ect o' ear&ier -eriods s+a&& a&so 7e stated in ter(s o' t+e (easuring unit current at t+e end o' t+e re-orting -eriod5 !or t+e -ur-ose o' -resenting co(-arati9e a(ounts in a di''erent -resentation currenc86 -aragra-+s 42(7) and 4$ o' Ind AS 216 The Effects of hanges in Foreign E!change Rates a--&85 T+e gain or &oss on t+e net (onetar8 -osition s+a&& 7e inc&uded in -ro'it or &oss and se-arate&8 disc&osed5

10

'he restatement of financial statements in accordance #ith this Standard re3"ires the application of certain proced"res as #ell as )"d!ement$ 'he consistent application of these proced"res and )"d!ements from period to period is more important than the precise acc"racy of the res"ltin! amo"nts incl"ded in the restated financial statements$

Historica& cost 'inancia& state(ents

0a&ance s+eet 11
Balance sheet amo"nts not already e4pressed in terms of the meas"rin! "nit c"rrent at the end of the reportin! period are restated (y applyin! a !eneral price inde4$ %onetary items are not restated (eca"se they are already e4pressed in terms of the monetary "nit c"rrent at the end of the reportin! period$ %onetary items are money held and items to (e recei&ed or paid in money$ 0ssets and lia(ilities lin.ed (y a!reement to chan!es in prices s"ch as inde4 lin.ed (onds and loans are ad)"sted in accordance #ith the a!reement in order to ascertain the amo"nt o"tstandin! at the end of the reportin! period$ 'hese items are carried at this ad)"sted amo"nt in the restated (alance sheet$ 0ll other assets and lia(ilities are non/monetary$ Some non/monetary items are carried at amo"nts c"rrent at the end of the reportin! period s"ch as net realisa(le &al"e and fair &al"e so they are not restated$ 0ll other non/ monetary assets and lia(ilities are restated$ %ost non/monetary items are carried at cost or cost less depreciation1 hence they are e4pressed at amo"nts c"rrent at their date of ac3"isition$ 'he restated cost or cost less depreciation of each item is determined (y applyin! to its historical cost and acc"m"lated depreciation the chan!e in a !eneral price inde4 from the date of ac3"isition to the end of the reportin! period$ 9or e4ample property plant and e3"ipment in&entories of ra# materials and merchandise !ood#ill patents trademar.s and similar assets are restated from the dates of their p"rchase$ In&entories of partly/finished and finished !oods are restated from the dates on #hich the costs of p"rchase and of con&ersion #ere inc"rred$ :etailed records of the ac3"isition dates of items of property plant and e3"ipment may not (e a&aila(le or capa(le of estimation$ In these rare circ"mstances it may (e necessary in the first period of application of this Standard to "se an independent professional assessment of the &al"e of the items as the (asis for their restatement$ 0 !eneral price inde4 may not (e a&aila(le for the periods for #hich the restatement of property plant and e3"ipment is re3"ired (y this Standard$ In these circ"mstances it may (e necessary to "se an estimate (ased for e4ample on the mo&ements in the e4chan!e rate (et#een the f"nctional c"rrency and a relati&ely sta(le forei!n c"rrency$

12

13

16

15

16

17

18

Some non/monetary items are carried at amo"nts c"rrent at dates other than that of ac3"isition or that of the (alance sheet for e4ample property plant and e3"ipment that has (een re&al"ed at some earlier date$ In these cases the carryin! amo"nts are restated from the date of the re&al"ation$ 'he restated amo"nt of a non/monetary item is red"ced in accordance #ith appropriate Indian 0cco"ntin! Standards #hen it e4ceeds its reco&era(le amo"nt$ 9or e4ample restated amo"nts of property plant and e3"ipment !ood#ill patents and trademar.s are red"ced to reco&era(le amo"nt and restated amo"nts of in&entories are red"ced to net realisa(le &al"e$ 0n in&estee that is acco"nted for "nder the e3"ity method may report in the c"rrency of a hyperinflationary economy$ 'he (alance sheet and statement of profit and loss of s"ch an in&estee are restated in accordance #ith this Standard in order to calc"late the in&estor;s share of its net assets and profit or loss$ <hen the restated financial statements of the in&estee are e4pressed in a forei!n c"rrency they are translated at closin! rates$ 'he impact of inflation is "s"ally reco!nised in (orro#in! costs$ It is not appropriate (oth to restate the capital e4pendit"re financed (y (orro#in! and to capitalise that part of the (orro#in! costs that compensates for the inflation d"rin! the same period$ 'his part of the (orro#in! costs is reco!nised as an e4pense in the period in #hich the costs are inc"rred$ 0n entity may ac3"ire assets "nder an arran!ement that permits it to defer payment #itho"t inc"rrin! an e4plicit interest char!e$ <here it is impractica(le to imp"te the amo"nt of interest s"ch assets are restated from the payment date and not the date of p"rchase$ =>efer to 0ppendi4 1? 0t the (e!innin! of the first period of application of this Standard the components of o#ners; e3"ity e4cept retained earnin!s and any re&al"ation s"rpl"s are restated (y applyin! a !eneral price inde4 from the dates the components #ere contri("ted or other#ise arose$ 0ny re&al"ation s"rpl"s that arose in pre&io"s periods is eliminated$ >estated retained earnin!s are deri&ed from all the other amo"nts in the restated (alance sheet$ 0t the end of the first period and in s"(se3"ent periods all components of o#ners; e3"ity are restated (y applyin! a !eneral price inde4 from the (e!innin! of the period or the date of contri("tion if later$ 'he mo&ements for the period in o#ners; e3"ity are disclosed in accordance #ith Ind 0S 1$

19

20

21

22

23 24

25

State(ent o' -ro'it and &oss 26

'his Standard re3"ires that all items in the statement of profit and loss are e4pressed in terms of the meas"rin! "nit c"rrent at the end of the reportin! period$ 'herefore all amo"nts need to (e restated (y applyin! the chan!e in the !eneral price inde4 from the dates #hen the items of income and e4penses #ere initially recorded in the financial statements$

/ain or &oss on net (onetar8 -osition

27

In a period of inflation an entity holdin! an e4cess of monetary assets o&er monetary lia(ilities loses p"rchasin! po#er and an entity #ith an e4cess of monetary lia(ilities o&er monetary assets !ains p"rchasin! po#er to the e4tent the assets and lia(ilities are not lin.ed to a price le&el$ 'his !ain or loss on the net monetary position may (e deri&ed as the difference res"ltin! from the restatement of non/monetary assets o#ners; e3"ity and items in the statement of profit and loss and the ad)"stment of inde4 lin.ed assets and lia(ilities$ 'he !ain or loss may (e estimated (y applyin! the chan!e in a !eneral price inde4 to the #ei!hted a&era!e for the period of the difference (et#een monetary assets and monetary lia(ilities$ 'he !ain or loss on the net monetary position is incl"ded in profit or loss$ 'he ad)"stment to those assets and lia(ilities lin.ed (y a!reement to chan!es in prices made in accordance #ith para!raph 13 is offset a!ainst the !ain or loss on net monetary position$ @ther income and e4pense items s"ch as interest income and e4pense and forei!n e4chan!e differences related to in&ested or (orro#ed f"nds are also associated #ith the net monetary position$ 0ltho"!h s"ch items are separately disclosed it may (e helpf"l if they are presented to!ether #ith the !ain or loss on net monetary position in the statement of profit and loss$

28

Current cost 'inancia& state(ents

0a&ance s+eet 29
Items stated at c"rrent cost are not restated (eca"se they are already e4pressed in terms of the meas"rin! "nit c"rrent at the end of the reportin! period$ @ther items in the (alance sheet are restated in accordance #ith para!raphs 11 to 25$

State(ent o' -ro'it and &oss 30

'he c"rrent cost statement of profit and loss (efore restatement !enerally reports costs c"rrent at the time at #hich the "nderlyin! transactions or e&ents occ"rred$ Aost of sales and depreciation are recorded at c"rrent costs at the time of cons"mption1 sales and other e4penses are recorded at their money amo"nts #hen they occ"rred$ 'herefore all amo"nts need to (e restated into the meas"rin! "nit c"rrent at the end of the reportin! period (y applyin! a !eneral price inde4$

/ain or &oss on net (onetar8 -osition 31

'he !ain or loss on the net monetary position is acco"nted for in accordance #ith para!raphs 27 and 28$

Ta*es
32
'he restatement of financial statements in accordance #ith this Standard may !i&e rise to differences (et#een the carryin! amo"nt of indi&id"al assets and lia(ilities in the (alance sheet and their ta4 (ases$ 'hese differences are acco"nted for in accordance #ith Ind 0S 12 Income Ta es$

State(ent o' cas+ '&o,s

6

33

'his Standard re3"ires that all items in the statement of cash flo#s are e4pressed in terms of the meas"rin! "nit c"rrent at the end of the reportin! period$

Corres-onding 'igures
34
Aorrespondin! fi!"res for the pre&io"s reportin! period #hether they #ere (ased on a historical cost approach or a c"rrent cost approach are restated (y applyin! a !eneral price inde4 so that the comparati&e financial statements are presented in terms of the meas"rin! "nit c"rrent at the end of the reportin! period$ Information that is disclosed in respect of earlier periods is also e4pressed in terms of the meas"rin! "nit c"rrent at the end of the reportin! period$ 9or the p"rpose of presentin! comparati&e amo"nts in a different presentation c"rrency para!raphs 62,(- and 63 of Ind 0S 21 apply$

Conso&idated 'inancia& state(ents

35
0 parent that reports in the c"rrency of a hyperinflationary economy may ha&e s"(sidiaries that also report in the c"rrencies of hyperinflationary economies$ 'he financial statements of any s"ch s"(sidiary need to (e restated (y applyin! a !eneral price inde4 of the co"ntry in #hose c"rrency it reports (efore they are incl"ded in the consolidated financial statements iss"ed (y its parent$ <here s"ch a s"(sidiary is a forei!n s"(sidiary its restated financial statements are translated at closin! rates$ 'he financial statements of s"(sidiaries that do not report in the c"rrencies of hyperinflationary economies are dealt #ith in accordance #ith Ind 0S 21$ If financial statements #ith different ends of the reportin! periods are consolidated all items #hether non/monetary or monetary need to (e restated into the meas"rin! "nit c"rrent at the date of the consolidated financial statements$

36

Se&ection and use o' t+e genera& -rice inde*

37 'he restatement of financial statements in accordance #ith this Standard re3"ires the "se of a !eneral price inde4 that reflects chan!es in !eneral p"rchasin! po#er$ It is prefera(le that all entities that report in the c"rrency of the same economy "se the same inde4$

Econo(ies ceasing to 7e +8-erin'&ationar8

$) ;+en an econo(8 ceases to 7e +8-erin'&ationar8 and an entit8 discontinues t+e -re-aration and -resentation o' 'inancia& state(ents -re-ared in accordance ,it+ t+is Standard6 it s+a&& treat t+e a(ounts e*-ressed in t+e (easuring unit current at t+e end o' t+e -re9ious re-orting -eriod as t+e 7asis 'or t+e carr8ing a(ounts in its su7se:uent 'inancia& state(ents5

2isc&osures
$9 T+e 'o&&o,ing disc&osures s+a&& 7e (ade< (a) t+e 'act t+at t+e 'inancia& state(ents and t+e corres-onding 'igures 'or -re9ious -eriods +a9e 7een restated 'or t+e c+anges in t+e genera& -urc+asing -o,er o' t+e 'unctiona& currenc8 and6 as a resu&t6 are stated in ter(s o' t+e (easuring unit current at t+e end o' t+e re-orting -eriod= ,+et+er t+e 'inancia& state(ents are 7ased on a +istorica& cost a--roac+ or a current cost a--roac+= and t+e identit8 and &e9e& o' t+e -rice inde* at t+e end o' t+e re-orting -eriod and t+e (o9e(ent in t+e inde* during t+e current and t+e -re9ious re-orting -eriod5 t+e duration o' t+e +8-erin'&ationar8 situation e*isting in t+e econo(8.

(7) (c)

(d)
60

'he disclos"res re3"ired (y this Standard are needed to ma.e clear the (asis of dealin! #ith the effects of inflation in the financial statements$ 'hey are also intended to pro&ide other information necessary to "nderstand that (asis and the res"ltin! amo"nts$

Appendix A Applying the Restatement Approach under Ind AS 29 !inancia& Re-orting in H8-erin'&ationar8 Econo(ies

This Appendi is an integral part o! the Indian Accounting Standard (Ind AS) "#, $inancial %eporting in &yperin!lationary 'conomies

0ac>ground
'his 0ppendi4 pro&ides !"idance on ho# to apply the re3"irements of Ind 0S 29 in a reportin! period in #hich an entity identifies the e4istence of hyperinflation in the economy of its f"nctional c"rrency #hen that economy #as not hyperinflationary in the prior period and the entity therefore restates its financial statements in accordance #ith Ind 0S 29$
?

Issues
2 'he 3"estions addressed in this 0ppendi4 are+

(a)

ho# sho"ld the re3"irement BC stated in terms of the meas"rin! "nit c"rrent at the end of the reportin! period; in para!raph 8 of Ind 0S 29 (e interpreted #hen an entity applies the StandardD ho# sho"ld an entity acco"nt for openin! deferred ta4 items in its restated financial statementsD

,(-

Accounting Treat(ent
3
In the reportin! period in #hich an entity identifies the e4istence of hyperinflation in the economy of its f"nctional c"rrency not ha&in! (een hyperinflationary in the prior period the entity shall apply the re3"irements of Ind 0S 29 as if the economy had al#ays (een hyperinflationary$ 'herefore in relation to non/monetary items meas"red at historical cost the entity;s openin! (alance sheet at the (e!innin! of the earliest period presented in the financial statements shall (e restated to reflect the effect of inflation from the date the assets #ere ac3"ired and the lia(ilities #ere inc"rred or ass"med "ntil the end of the reportin! period$ 9or non/monetary items carried in the

'he identification of hyperinflation is (ased on the entity;s )"d!ement of the criteria in para!raph 3 of Ind 0S 29

openin! (alance sheet at amo"nts c"rrent at dates other than those of ac3"isition or inc"rrence that restatement shall reflect instead the effect of inflation from the dates those carryin! amo"nts #ere determined "ntil the end of the reportin! period$

0t the end of the reportin! period deferred ta4 items are reco!nised and meas"red in accordance #ith Ind 0S 12$ *o#e&er the deferred ta4 fi!"res in the openin! (alance sheet for the reportin! period shall (e determined as follo#s+ ,athe entity remeas"res the deferred ta4 items in accordance #ith Ind 0S 12 after it has restated the nominal carryin! amo"nts of its non/ monetary items at the date of the openin! (alance sheet of the reportin! period (y applyin! the meas"rin! "nit at that date$ the deferred ta4 items remeas"red in accordance #ith ,a- are restated for the chan!e in the meas"rin! "nit from the date of the openin! (alance sheet of the reportin! period to the end of that reportin! period$

,(-

'he entity applies the approach in ,a- and ,(- in restatin! the deferred ta4 items in the openin! (alance sheet of any comparati&e periods presented in the restated financial statements for the reportin! period in #hich the entity applies Ind 0S 29$ 5 0fter an entity has restated its financial statements all correspondin! fi!"res in the financial statements for a s"(se3"ent reportin! period incl"din! deferred ta4 items are restated (y applyin! the chan!e in the meas"rin! "nit for that s"(se3"ent reportin! period only to the restated financial statements for the pre&io"s reportin! period$

I&&ustrati9e e*a(-&e
10

This e!ample accompanies" but is not part of" Appendi! A#

IE1

'his e4ample ill"strates the restatement of deferred ta4 items #hen an entity restates for the effects of inflation "nder Ind 0S 29 $inancial %eporting in &yperin!lationary 'conomies$ 0s the e4ample is intended only to ill"strate the mechanics of the restatement approach in Ind 0S 29 for deferred ta4 items it does not ill"strate an entity;s complete financial statements$

!acts
I82 0n entity;s (alance sheet at 31 :ecem(er 20E2,(efore restatement- is as follo#s+

11

7ote 0a&ance S+eet ASSETS 2roperty plant and e3"ipment @ther assets 'otal assets EA3IT1 A 2 "IA0I"ITIES 'otal e3"ity Fia(ilities :eferred ta4 lia(ility @ther lia(ilities 'otal lia(ilities 'otal e3"ity and lia(ilities

24@2 (Rs) (i&&ion 300 EEE EEE

20E1 ,>s- million 600 EEE EEE

EEE

EEE

30 EEE EEE EEE

20 EEE EEE EEE

otes Property, plant and equipment 0ll items of property plant and e3"ipment #ere ac3"ired in :ecem(er 20E0. Property, plant and equ p!ent are depre" ated

o#er t$e r u%e&ul l &e, '$ "$ % & #e year%.

2 (e!erred ta liability 'he deferred ta4 lia(ility at 31 :ecem(er 20E2 of >s 30 million is meas"red as the ta4a(le temporary difference (et#een the carryin! amo"nt of property plant and e3"ipment of >s$300 and their ta4 (ase of >s$200$ 'he applica(le ta4 rate is 30 per cent$ Similarly the deferred ta4 lia(ility at 31 :ecem(er 20E1 of >s 20 million is meas"red as the ta4a(le temporary difference (et#een the carryin! amo"nt of property plant and e3"ipment of >s 600 and their ta4 (ase of >s 333. 0ss"me that the entity identifies the e4istence of hyperinflation in for e4ample 0pril 20E2 and therefore applies Ind 0S 29 from the (e!innin! of 20E2$ 'he entity restates its financial statements on the (asis of the follo#in! !eneral price indices and con&ersion factors$

I83

12

/enera& -rice indices :ecem(er 20E0 ,a:ecem(er 20E1 :ecem(er 20E2 95 135 223

Con9ersion 'actors at $1 2ec 24@2 2$367 1$652 1$000

,a- 9or e4ample the con&ersion factor for :ecem(er 20E0 is 2$367G223H95

Restate(ent
I86 'he restatement of the entity;s 20E2 financial statements is (ased on the follo#in! re3"irements+

I85

2roperty plant and e3"ipment are restated (y applyin! the chan!e in a !eneral price inde4 from the date of ac3"isition to the end of the reportin! period to their historical cost and acc"m"lated depreciation. :eferred ta4es sho"ld (e acco"nted for in accordance #ith Ind 0S 12 Income Ta es$ Aomparati&e fi!"res for property plant and e3"ipment for the pre&io"s reportin! period are presented in terms of the meas"rin! "nit c"rrent at the end of the reportin! period$ Aomparati&e deferred ta4 fi!"res sho"ld (e meas"red in accordance #ith para!raph 6 of the 0ppendi4 0$

'herefore the entity restates its (alance sheet at 31 :ecem(er 20E2 as follo#s+

7ote

0a&ance S+eet (restated) ASSETS 2roperty plant and e3"ipment @ther assets 'otal assets EA3IT1 A 2 "IA0I"ITIES 'otal e3"ity Fia(ilities :eferred ta4 lia(ility

24@2 Rs (i&&ion 706 EEE EEE

20E1 >s million 939 EEE EEE

EEE

EEE

151

117

13

@ther lia(ilities 'otal lia(ilities 'otal e3"ity and lia(ilities otes Property, plant and equipment

EEE EEE EEE

EEE EEE EEE

0ll items of property plant and e3"ipment #ere p"rchased in :ecem(er 20E0 and

depre" ated o#er a & #e(year per od. )$e "o%t o& property, plant and equ p!ent % re%tated to re&le"t t$e "$an*e n t$e *eneral pr "e le#el % n"e a"qu % t on, e t$e "on#er% on &a"tor % 2.347 (223+95).
*istorical >s million Aost of property plant and e3"ipment :epreciation 20E1 Aarryin! amo"nt 31 :ecem(er 20E1 :epreciation 20E2 Aarryin! amo"nt 31 :ecem(er 20E2 2 500 ,100600 ,100300 >estated >s million 1 176 ,235939 ,235706

(e!erred ta liability 'he nominal deferred ta4 lia(ility at 31 :ecem(er 20E2 of >s 30 million is meas"red as the ta4a(le temporary difference (et#een the carryin! amo"nt of property plant and e3"ipment of >s 300 and their ta4 (ase of >s 200$ Similarly the deferred ta4 lia(ility at 31 :ecem(er 20E1 of >s 20 million is meas"red as the ta4a(le temporary difference (et#een the carryin! amo"nt of property plant and e3"ipment of >s 600 and their ta4 (ase of >s 333$ 'he applica(le ta4 rate is 30 per cent$ In its restated financial statements at the end of the reportin! period the entity remeas"res deferred ta4 items in accordance #ith the !eneral pro&isions in Ind 0S 12 ie on the (asis of its restated financial statements$ *o#e&er (eca"se deferred ta4 items are a f"nction of carryin! amo"nts of assets or lia(ilities and their ta4 (ases an entity cannot restate its comparati&e deferred ta4 items (y applyin! a !eneral price inde4$ Instead in the reportin! period in #hich an entity applies the restatement approach "nder Ind 0S 29 it ,aremeas"res its comparati&e deferred ta4 items in accordance #ith Ind 0S 12 after it has restated the nominal carryin! amo"nts of its non/monetary items at the date of the openin! (alance sheet of the c"rrent reportin! period (y applyin! the meas"rin! "nit at that date and ,(- restates the remeas"red deferred ta4 items for the chan!e in the meas"rin! "nit from the date of the openin! (alance sheet of the c"rrent period "p to the end of the reportin! period$

In t$e e,a!ple, t$e re%tated de&erred ta, l a- l ty % "al"ulated a% &ollo'%.

>s million 0t the end of the reportin! period+ >estated carryin! amo"nt of property plant and e3"ipment ,see note 1'a4 (ase

706 ,200-

14

'emporary difference I 30 per cent ta4 rate G >estated deferred ta4 lia(ility 31 :ecem(er 20E2 Aomparati&e deferred ta4 fi!"res+ >estated carryin! amo"nt of property plant and e3"ipment =either 600 J 1$621 ,con&ersion factor 1$621 G 135H95- or 939H1$652 ,con&ersion factor 1$652 G 223H135-? 'a4 (ase 'emporary difference I 30 per cent ta4 rate G >estated deferred ta4 lia(ility 31 :ecem(er 20E1at the !eneral price le&el at the end of 20E1 >estated deferred ta4 lia(ility 31 :ecem(er 20E1 at the !eneral price le&el at the end of 20E2,con&ersion factor 1$652 G 223H135-

506 151

568 ,333235

71

117

I86

In this e4ample the restated deferred ta4 lia(ility is increased (y >s 36 to >s 151 from 31 :ecem(er 20E1 to 31 :ecem(er 20E2$ 'hat increase #hich is incl"ded in profit or loss in 20E2 reflects ,a- the effect of a chan!e in the ta4a(le temporary difference of property plant and e3"ipment and ,(- a loss of p"rchasin! po#er on the ta4 (ase of property plant and e3"ipment$ 'he t#o components can (e analysed as follo#s+

15

>s million

8ffect on deferred ta4 lia(ility (eca"se of a decrease in the ta4a(le temporary difference of property plant and e3"ipment ,/>s 235 K >s133- J 305

31 ,65,3636

Foss on ta4 (ase (eca"se of inflation in 20E2 ,>s 333 J 1$652 >s 333- J 305 7et increase of deferred ta4 lia(ility :e(it to profit or loss in 20E2

'he loss on ta4 (ase is a monetary loss$ 2ara!raph 28 of Ind 0S 29 e4plains this as follo#s+ 'he !ain or loss on the net monetary position is incl"ded in net income$ 'he ad)"stment to those assets and lia(ilities lin.ed (y a!reement to chan!es in prices made in accordance #ith para!raph 13 is offset a!ainst the !ain or loss on net monetary position$ @ther income and e4pense items s"ch as interest income and e4pense and forei!n e4chan!e differences related to in&ested or (orro#ed f"nds are also associated #ith the net monetary position$ 0ltho"!h s"ch items are separately disclosed it may (e helpf"l if they are presented to!ether #ith the !ain or loss on net monetary position in the statement of profit and loss$

16

Appendix 1
)ote* This Appendi is not a part o! the proposed Indian Accounting Standard (Ind AS) "#, $inancial %eporting in &yperin!lationary 'conomies. The purpose o! this Appendi is only to bring out the di!!erences between the this Indian Accounting Standard and corresponding International Accounting Standard IAS "#, $inancial %eporting in &yperin!lationary 'conomies.

Co(-arison ,it+ IAS 296 Hyperinflationary Economies

1 2

Financial

Reporting

in

Ind 0S 29 re3"ires an additional disclos"re re!ardin! the d"ration of the hyperinflationary sit"ation e4istin! in the economy as compared to I0S 29$ 2ara!raph n"m(er 23 appears as B:eleted Bin I0S 29$ In order to maintain consistency #ith para!raph n"m(ers of I0S 29 the para!raph n"m(er is retained in Ind 0S 29$ :ifferent terminolo!y is "sed in this standard e$!$ term B(alance sheet; is "sed instead of BStatement of financial position; and BStatement of profit and loss is "sed instead of BStatement of comprehensi&e income;$

17