• IAS 21, The Effects of Changes in Foreign Exchange Rates and
• IAS 29, Financial Reporting in Hyperinflationary Economies

History

• Issued: November 2000
• Effective date: Annual financial periods beginning on or after 1 January 2001
• Superseded by IAS 21 (Revised 2003) effective for annual financial reporting periods beginning 1 January 2005.

SIC 19 emphasises that the currency an enterprise uses in measuring items in its financial statements should be selected to provide information about the enterprise that is useful and reflects the economic substance of the underlying events and circumstances relevant to that enterprise. All other currencies are treated as foreign currencies in the measurement of items in the financial statements and translation of financial statements. It follows that an enterprise does not have an arbitrary choice to avoid restatement under IAS 29 of financial statements which are measured in the currency of a hyperinflationary economy.

For example, assume a Russian enterprise uses the Russian Rouble as an appropriate currency for measurement of items in its financial statements. The enterprise determines the treatment of foreign exchange transactions under IAS 21 and it also restates those financial statements under IAS 29 if circumstances indicate that the Ruble is the currency of a hyperinflationary economy. However, the enterprise is not precluded from converting those financial statements to another currency for presentation, for example converting those financial statements to be presented in German Marks.