IAS 29 not required with Capital Maintenance in Units of Constant Purchasing Power
IFRS authorised Financial Capital Maintenance in Units of Constant Purchasing Power at all levels of inflation and deflation – including during hyperinflation - as an alternative to Historical Cost Accounting in the original Framework for the Preparation and Presentation of Financial Statements, Par. 104 (a) in 1989 – now the Conceptual Framework (2010), Par. 4.59 (a) – which states:
“Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power.”
The Conceptual Framework, Par. 4.59 (a) does not state that it (Par. 4.59 (a)) only applies to low inflationary and deflationary economies. It applies to all levels of inflation and deflation, including during hyperinflation.
An entity in a hyperinflationary economy is thus authorised in IFRS to measure financial capital maintenance in units of constant purchasing power; i.e., authorised in IFRS to implement Capital Maintenance in Units of Constant Purchasing Power during hyperinflation.
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