PAS 29 FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES

PROBLEM 1: MULTIPLE CHOICE

1. PAS 29 applies only in case of
a. Inflation
b. Deflation
c. Hyperinflation
d. Foreign operation
ANSWER: A. Inflation
2. According to PAS 29, which of the following are restated in case an entity’s functional
currency is that of a hyperinflationary economy?
a. Monetary items
b. Nonmonetary items
c. Physical assets
d. Intangible assets
ANSWER: B. Nonmonetary items
3. Entity A acquires land for P800, 000 on February 14, 1998. Entity A’s functional currency
is that of a hyperinflationary economy. The general price indices are as follows:
February 14, 1998 100
Average – 20x2 180
December 31, 20x2 190
What is the restated amount of the land on December 31, 20x2?
a. 1,520,000
b. 844,444
c. 1,467,649
d. 800,000

PROBLEM 2: FOR CLASSROOM DISCUSSION

1. Entity A operates in a hyperinflationary economy. Entity A has the following assets
before restatement on December 31, 20x1:
Accounts receivable, net P300, 000
Building, net 900,000
The building was acquired on May 21, 20x0. The general price indices are as follows:

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 May 21, 20x0 100
Average – 20x2 180
December 31, 20x1 150
What are the restated amounts if the assets?
Accounts Receivable Building
a. 250,000 1,350,000
b. 286,667 1,478,932
c. 300,000 1,350,000
d. 300,000 900,000
ANSWER: B. 286,667 1,478,932
2. Entity A operates in a hyperinflationary economy. Entity A has total sales revenue of P1,
200,000 before restatement on December 31, 20x1. The sales were earned evenly
during the period. The general price indices are as follows:
December 31, 20x0 100
Average – 20x2 180
December 31, 20x1 200
What is the restated amount of sales?
a. 1,333,333
b. 1,300,000
c. 2,400,000
d. 1,200,000
ANSWER: B. 1,300,000

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