Wiley IFRS 2014: Interpretation and Application of International Financial Reporting Standards

Chapter 35INFLATION AND HYPERINFLATION

1. INTRODUCTION
2. DEFINITIONS OF TERMS
3. RECOGNITION AND MEASUREMENT
   1. Historical Review of Inflation Accounting
      1. Why inflation undermines historical cost financial reporting
      2. General vs. specific price changes
      3. Experiments and proposals for inflation accounting
      4. Price level accounting concepts and proposals
      5. Current value models and proposals
      6. Limitations on replacement cost
   2. Measuring Income under the Replacement Cost Approach
      1. Determining current costs
      2. Inventory costing problems
      3. Purchasing power gains or losses in the context of current cost accounting
4. FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES
   1. Severe Hyperinflation According to IFRS 1
   2. Restating Historical Cost Financial Statements under Hyperinflation Conditions
   3. Restating Current Cost Financial Statements under Hyperinflation Conditions
   4. Comparative Financial Statements
   5. Other Disclosure Issues
   6. Economies Which Cease Being Hyperinflationary
   7. Guidance on Applying the Restatement Approach
5. US GAAP COMPARISON
6. APPENDIX: MONETARY VS. NONMONETARY ITEMS

INTRODUCTION

While the use of fair value as a measurement attribute for purposes of financial statement presentation has become increasingly popular in recent years, accounting principles—both most national GAAP and IFRS—still remain substantially grounded in historical costing.

In periods of price stability, the use of historical cost information does not do much of a disservice to understanding the reporting entity's financial position and results ...