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Exposure Draft IASB/ED/2024/4 <i>Translation to a Hyperinflationary Presentation Currency</i> (Proposed amendments to IAS 21)-MASB

Exposure Draft IASB/ED/2024/4 Translation to a Hyperinflationary Presentation Currency (Proposed amendments to IAS 21)


The International Accounting Standards Board (IASB) has published for public comment an Exposure Draft, IASB/ED/2024/4 Translation to a Hyperinflationary Presentation Currency (Proposed amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates). The Exposure Draft intends to address accounting issues that affect companies that translate financial information from a non-hyperinflationary currency to a hyperinflationary currency. 

The IASB observed that in hyperinflationary economies, monetary values rapidly lose purchasing power, so financial information is most useful when expressed in current terms. Applying IAS 21 today does not always result in that outcome and in some cases has led to diversity in accounting practice.

The Exposure Draft proposes that when an entity translates amounts from a functional currency that is the currency of a non-hyperinflationary economy to a presentation currency that is the currency of a hyperinflationary economy, the entity translates those amounts, including comparative amounts, using the closing rate at the date of the most recent statement of financial position. The IASB expects this translation method, which is already used in other situations, would result in an entity presenting amounts subject to translation in terms of a current measuring unit.

The proposed amendments are expected to provide more consistent and useful information in financial statements presented in hyperinflationary currencies; remove diversity in accounting practices related to translation into a hyperinflationary currency; improve comparability of financial statements among companies and jurisdictions; and provide simpler and low-cost accounting requirements for affected companies.

Invitation to comment

The Exposure Draft is open for comment until 25 October 2024.

You may provide your comments via email to us at technical@masb.org.my

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