Ind AS 29: Financial Reporting in Hyperinflationary Economies…

Standard orientation

What Ind AS 29 is designed to achieve

Require financial statements of an entity whose functional currency is hyperinflationary to be expressed in the measuring unit current at the end of the reporting period.

Scope: Applies to financial statements, including consolidated statements, of entities whose functional currency is that of a hyperinflationary economy.

Assessment

Use qualitative and quantitative indicators together.

Monetary items

Not restated because already in current monetary units.

Non-monetary items

Restate from acquisition or revaluation date unless already current.

Monetary result

Recognise separately in profit or loss.

Full standard map

Paragraph-by-paragraph register

Paragraphs	Requirement and simple decode
1–4	Scope, judgement and timing Apply to hyperinflationary functional currencies; no absolute trigger exists and entities using the same currency should apply consistently from the same date.
3(a)–(e)	Indicators Currency substitution, stable-currency pricing, inflation-compensating credit, indexation and cumulative inflation approaching/exceeding 100% over three years.
5–9	Restatement objective Express historical- or current-cost statements and comparatives in the measuring unit current at reporting date; recognise net monetary gain/loss separately.
11–13	Historical-cost balance sheet Do not restate monetary items; adjust index-linked items; restate other non-monetary items from acquisition dates.
14	Revalued assets Restate from revaluation date.
15–18	Records and foreign-currency assets Use detailed records or independent estimates and translate foreign-currency amounts consistently.
19	Measurement ceilings Apply recoverable amount and NRV limits after restatement.
20	Investee information Restate relevant investee financial statements before equity-method use.
21	Borrowing costs Do not capitalise the inflation-compensation component after price-level restatement.
22–24	Equity Restate contributed equity from contribution dates and derive opening retained earnings after restating assets and liabilities.
25	Income statement Restate income and expenses from transaction dates using the general price index.
26	Net monetary result Determine directly or approximately using weighted monetary positions and index movement.
27–28	Tax and cash flow Apply Ind AS 12 and express all cash-flow items in current measuring units.
29–31	Current-cost statements Restate only amounts not already current and recognise monetary gain/loss.
32	Consolidation Restate subsidiaries in hyperinflationary currencies and then translate under Ind AS 21.
33	Comparatives Restate corresponding figures and related historical information into the current measuring unit.
34	Cessation Use the prior period’s closing restated amounts as the basis for future carrying amounts.
35–36	Price index Use a reliable general price index consistently.
37–38	Disclosures Explain restatement, basis, index level and movement, and historical/current cost basis.
39–41	Effective-date history Tracks historical adoption and terminology updates.

Major areas decoded

Technical requirements in simple language

Economy-wide assessment

Use inflation data, indexation, currency substitution, pricing and credit behaviour.

Net monetary exposure

Net monetary assets create purchasing-power loss; net monetary liabilities can create gain.

Restatement chronology

Index non-monetary assets, equity and P&L from recognition dates.

Borrowing costs

Expensing the inflation component avoids double counting.

Consolidation sequence

Restate first, translate second.

Cessation

Last restated amounts become the new basis.

Comparatives

Restate all comparative information into the reporting-date unit.

Visual learning

Finin2min decision map

Editable SVG and high-resolution PNG are included in the batch assets.

Exceptions

What professionals frequently overlook

The 100% measure is not a bright line.
Monetary items are not index-restated.
Current-value items may need no further restatement.
Restated amounts remain subject to impairment and NRV.
Inflation-compensation borrowing cost is expensed.
Group entities using the same currency should begin consistently.
Restatement precedes translation.
Restated values are not unwound when hyperinflation ceases.

Practical application

Transaction examples

Fact pattern

Treatment

Reason

Cash

No index restatement

It is monetary.

Land bought two years ago

Restate from purchase date

It is a historical-cost non-monetary asset.

Inventory at NRV

Do not exceed NRV

Other standards cap carrying amount.

Share capital issued mid-year

Restate from issue date

Equity is indexed.

Monthly revenue

Restate using monthly indices

P&L must use current units.

Net monetary liabilities

Potential monetary gain

Liabilities lose purchasing-power value.

Accounting mechanics

Illustrative journal entries

Restatement

Dr / Cr Non-monetary asset or equity Cr / Dr Restatement adjustment

Net monetary loss

Dr Net monetary loss Cr Restatement balancing amount

Net monetary gain

Dr Restatement balancing amount Cr Net monetary gain

Impairment after restatement

Dr Impairment loss Cr Asset

CA / finance / boardroom cases

Applied case studies

1. Inflation at 95%

Applied case

Three-year inflation is 95%, but wages, contracts and interest are fully indexed and citizens use stable currency.

Finin2min analysis: Hyperinflation may exist despite being below 100%.

2. Inflation at 105%

Applied case

Inflation exceeds 100% but currency and pricing behaviour appear stable.

Finin2min analysis: The threshold is strong evidence but not the sole test.

3. Net monetary assets

Applied case

The entity holds large cash and receivables funded by equity.

Finin2min analysis: It normally recognises a net monetary loss.

4. Foreign subsidiary

Applied case

A subsidiary’s functional currency becomes hyperinflationary.

Finin2min analysis: Restate under Ind AS 29 before translating under Ind AS 21.

5. Cessation

Applied case

The economy ceases to be hyperinflationary.

Finin2min analysis: Use prior closing restated amounts as the new basis.

Global comparison

Ind AS versus IFRS and US GAAP

Topic	Ind AS	IFRS	US GAAP
Core model	General price-level restatement.	Same.	US GAAP generally remeasures using reporting currency as functional.
100% indicator	One indicator.	Same.	Similar threshold concept but different accounting result.
Monetary result	Separate P&L gain/loss.	Broadly aligned.	No equivalent general price-level model.
Translation	Restate then translate.	Same.	Temporal remeasurement generally applies.
Cessation	Restated amounts become basis.	Broadly aligned.	Different model.

Implementation lens

Implications for key stakeholders

CFO

Approve assessment and application date.

FP&A

Separate nominal and real performance.

Tax

Assess tax-base effects.

Treasury

Monitor currency substitution and monetary exposure.

Audit committee

Challenge index and monetary result.

Quality-control watchlist

Common errors and exam traps

Treating 100% as automatic.
Waiting until year-end after clear indicators.
Restating monetary items.
Failing to restate equity and comparatives.
Capitalising inflation-component borrowing costs.
Ignoring impairment after restatement.
Translating before restating.
Using inconsistent indices.
Omitting net monetary result.
Unwinding restated values when inflation ceases.

Finin2min Q&A

Frequently asked questions

1. Is 100% an absolute threshold?

No.

2. Are cash and receivables restated?

No.

3. Are comparatives restated?

Yes.

4. What happens to borrowing costs?

The inflation-compensation portion is not capitalised.

5. What is the order for a foreign operation?

Restate, then translate.

6. What happens when hyperinflation ends?

Use the last restated amounts as the new basis.

Two-minute revision

Finin2min cheat sheet

ASSESS ECONOMY → INDEX NON-MONETARY ITEMS/EQUITY/P&L → MONETARY GAIN/LOSS → TAX → CASH FLOWS → TRANSLATE

Validation register

Primary sources

ICAI Compendium 2025–26Primary or authoritative validation source.
Open source ↗

IFRS Foundation — IAS 29Primary or authoritative validation source.
Open source ↗

ICAI ASB archive — IAS 29 indicator agenda decisionPrimary or authoritative validation source.
Open source ↗

Review date: 26 June 2026.