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CMA Intermediate · Corporate Accounting and Auditing · Conceptual Framework

A company reports in the currency of a hyperinflationary economy. How does the Conceptual Framework's stance on the accounting model apply to such an entity?

ICAI does not intend to prescribe a particular accounting model except in exceptional circumstances. Reporting in the currency of a hyperinflationary economy is the example given, so a model may be prescribed for such an entity.

  1. AICAI never prescribes any model, including for hyperinflationary economies
  2. BICAI does not intend to prescribe a particular model other than in exceptional circumstances, such as reporting in a hyperinflationary currencyCorrect
  3. CICAI always prescribes the historical cost model for every entity
  4. DEntities in hyperinflationary economies are exempt from financial reporting

Explanation

The Framework applies to a range of accounting models and ICAI does not intend to prescribe a particular model except in exceptional circumstances. It gives reporting in the currency of a hyperinflationary economy as an example. The 'never prescribes' option ignores this exception.

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