Translation to a Hyperinflationary Presentation Currency (IAS 21)

The IASB met on 21 May 2025 to discuss stakeholder feedback on its Exposure Draft Translation to a Hyperinflationary Presentation Currency. The discussion covered:

• the project direction;
• the proposed translation method (Agenda Papers 12A–12B); and
• the proposed disclosure requirements and the proposed requirements for when an economy ceases to be hyperinflationary (Agenda Paper 12C).

Project direction

The IASB tentatively decided not to include translation to a hyperinflationary presentation currency in its broader considerations around a possible project on hyperinflation.

All 14 IASB members agreed with this decision.

Proposed translation method and preparing comparative information (Agenda Papers 12A–12B)

The IASB tentatively decided to require an entity to translate amounts subject to translation, including comparative amounts, using the closing rate at the date of the most recent statement of financial position if:

1. the entity’s functional currency is the currency of a non-hyperinflationary economy and it presents its financial statements in the currency of a hyperinflationary economy; and
2. the entity’s presentation currency is the currency of a hyperinflationary economy and it translates the results and financial position of a foreign operation with the functional currency of a non-hyperinflationary economy.

All 14 IASB members agreed with this decision.

The IASB also tentatively decided to introduce an exception for the entities described in (b) if such entities also have the functional currency of a hyperinflationary economy and apply IAS 29 Financial Reporting in Hyperinflationary Economies. Such entities would instead restate the comparative information of the foreign operation by applying the same change in the general price index as they apply to other corresponding figures, in accordance with IAS 29.

Ten of 14 IASB members agreed with this decision.

Disclosure and other aspects (Agenda Paper 12C)

The IASB tentatively decided:

1. to require an entity that applies the proposed translation method to disclose:
   1. the fact that all amounts in its financial statements or the results and financial position of its foreign operations have been translated at the closing rate at the date of the most recent statement of financial position; and
   2. the fact that its presentation currency has ceased to be the currency of a hyperinflationary economy, if applicable.
2. to require an entity to disclose summarised financial information about the foreign operations to which it applied the proposed translation method;
3. to require an entity that applies the exception from translating the comparative information of its foreign operation (as described in Agenda Papers 12A–12B) to label the comparative summarised financial information of the foreign operations to show that the entity prepared the information by applying the same change in the general price index as it applied to other corresponding figures; and
4. to require an entity whose presentation currency has ceased to be hyperinflationary to apply paragraph 39 of IAS 21 The Effects of Changes in Foreign Exchange Rates prospectively to amounts arising after the end of its previous reporting period.

All 14 IASB members agreed with these decisions.