The IASB discussed additional work performed by the staff on a recommendation by the IFRS Interpretations Committee to amend IFRSs to clarify how an entity should resume presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because it had a functional currency that was subject to severe hyperinflation.
In these discussions, the IASB noted that the issue is:
- different from other concerns relating to the scope of IAS 29 Financial Reporting in Hyperinflationary Economies that have been raised by interested parties; and
- of greater significance to entities that are subject to severe hyperinflation than for entities with an interest in an entity that is subject to severe hyperinflation. Entities with an interest in an entity that is subject to severe hyperinflation have generally been able to find appropriate existing guidance in IFRSs.
Consequently, the IASB tentatively decided to amend IFRS 1 by providing an exemption that could be used when an entity resumes presenting financial statements in accordance with IFRSs after being subject to severe hyperinflation. This exemption would allow an entity to elect to measure assets and liabilities at fair value, and use that fair value as the deemed cost of those assets and liabilities in the opening IFRS statement of financial position.
The IASB requested that the basis for conclusions should reflect that:
- the exemption is an election and that an entity may apply other guidance in IFRS 1 when measuring assets and liabilities in the opening IFRS statement of financial position; and
- the amendment does not provide guidance for entities affected by severe hyperinflation that are not within the scope of IFRS 1. Specifically, the Board did not make any tentative decisions on how, in the consolidated financial statements of parents, venturers and investors with an interest in an entity that was subject to severe hyperinflation, an entity should account for that interest.
The Board tentatively decided to publish an exposure draft with a 60-day comment period so that the guidance may be available on a timely basis for those jurisdictions that are currently affected by the issue.