Net Monetary Gains and Losses Authorized During Low Inflation and Deflation in IFRS Since 1989
Accountants have to calculate the net monetary loss or gain from holding monetary items when they choose the Capital Maintenance in Units of Constant Purchasing Power model and measure financial capital maintenance in units of constant purchasing power in the same way as the IASB currently requires its calculation and accounting during hyperinflation. The calculation and accounting of net monetary losses and gains during low inflation and deflation have thus been authorized in IFRS since 1989. There are net monetary losses and net monetary gains during low inflation too, but they are not required to be calculated when accountants choose the traditional HCA model.
Net constant item gains and losses are also calculated and accounted under Capital Maintenance in Units of Constant Purchasing Power.
Read more about this topic: Constant Purchasing Power Accounting
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