IASB Proposes Amendments to IAS 21 (Translation to a Hyperinflationary Presentation Currency)

On 25 July 2024, the IASB published the Exposure Draft IASB ED/2024/4: Translation to a Hyperinflationary Presentation Currency (Proposed amendments to IAS 21).

The proposed amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates are in response to a submission to the IFRS Interpretations Committee. The objective of the proposed amendments is to align how an entity, whose presentation currency is from a hyperinflationary economy, translates the results and financial position of a foreign operation, whose functional currency is from a non-hyperinflationary economy. Additionally, this situation should be treated in the same manner as the translation of an entity’s financial statements from a non-hyperinflationary functional currency to a hyperinflationary presentation currency.

Specifically, the IASB proposes that when translating an entity’s financial statements (or the results and financial position of a foreign operation) from a non-hyperinflationary functional currency into a hyperinflationary presentation currency, all amounts (i.e., assets, liabilities, equity items, income and expenses, including comparatives) should be translated at the closing rate as of the date of the most recent statement of financial position.

The Exposure Draft is open for comment until 22 November 2024.

Further details can be found in the latest IASB News.