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ACCA Strategic Professional · Strategic Business Reporting (International) · Foreign transactions and entities

An entity's functional currency is the currency of an economy that has become hyperinflationary under IAS 29. The entity measures non-monetary assets at historical cost. Which statement describes the required restatement in its financial statements?

Under IAS 29, non-monetary items at historical cost are restated using a general price index from their acquisition date to the reporting date. Monetary items are not restated because they are already expressed in current purchasing power, and the net monetary gain or loss goes to profit or loss.

  1. AMonetary items are restated using the general price index, and non-monetary items are left at historical cost
  2. BOnly the statement of profit or loss is restated, using average price indices
  3. CNon-monetary items carried at cost are restated by a general price index from acquisition date, while monetary items are not restatedCorrect
  4. DAll items are restated, including monetary assets and liabilities, using a general price index

Explanation

IAS 29 requires non-monetary items carried at historical cost to be restated for the change in a general price index from acquisition to the reporting date. Monetary items are already stated in the current measuring unit and are not restated. The gain or loss on net monetary position is taken to profit or loss.

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