Chapter 39 Financial Reporting in Hyperinflationary Economies (IAS 29)
431
EXAMPLE: FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES EXAMPLE 39.1 Darbrow Inc. was incorporated on January 1, 20X2, with an equity capital of $40 million. The statement of financial positions of the entity at the beginning and end of the first financial year were as follows: Beginning $’000
End $’000
Assets Property, plant, and equipment
60,000
50,000
Inventory
30,000
40,000
Receivables
50,000
60,000
140,000
150,000
40,000
40,000
–
10,000
100,000
100,000
140,000
150,000
Equity and Liabilities Share capital Accumulated profit Borrowings
The statement of comprehensive income for the first year reflected the following amounts: $’000 Revenue Operating expenses Depreciation of plant and equipment Operating profit Interest paid Profit before tax Income tax expense Profit after tax
800,000 (750,000) (10,000) 40,000 (20,000) 20,000 (10,000) 10,000
Additional Information The rate of inflation was 120 percent for the year. The inventory represents two months’ purchases, and all Statement of Comprehensive Income items accrued evenly during the year.