Sign up  |  Log in

Can there ever be CTA for hyperinflation under IFRS?

My understanding is that whenever we restate for inflation under IFRS and then translate into the parent’s currency, we just multiply everything including the purchasing power gain or loss in the IS by the current exchange rate, so there would never be a CTA in stockholder’s equity on the parent’s balance sheet. Is this correct? Thank you!

Cash is a fact, profit is an opinion

Make the most of your CFA exam prep in one weekend! Join renowned instructors, Peter Olinto, Darren Degraaf & David Hetherington in May for a live, two-day CFA intensive final review class.

When adjusting for inflation under IFRS, monetary assets/liabilities are not restated for change in general price level.  (All other accounts are restated: non-monetary assets/liabilities, equity accounts, all income statement items.)  The net gain/(loss) in purchasing power that results from holding monetary assets/liabilities is reflected in the income statement.

Source: R16, 3.5 (pg. 172 of ebook)