In 2018, Argentina was declared a hyperinflationary economy due, among other causes, to the fact that the accumulated inflation rate of its economy exceeded 100% over a continuous period of three years.
As a result, the Group has applied IAS 29 to the financial statements of Argentine companies with retroactive effect from 1 January 2018. The application of this standard entails the following exceptions to what is stated above in the rest of the valuation standards:
- Restatement of non-monetary assets and liabilities net of deferred taxes, depending on the case, from their acquisition date, date of first application of IFRS or date of last revaluation. The counterpart of this restatement has been reserves or the result from exposure to changes in the purchasing power of the year’s currency depending on the period in which it is generated.
- Equity effects: equity has been restated in the same way as the other non-monetary items; additionally, the Group has decided to classify the historical translation differences associated with the devaluation of the currency in Argentina to consolidated reserves.
- The restatement of the monthly results of Argentine companies in accordance with the accumulated inflation for the year since it was generated will be adjusted against the consolidated comprehensive income derived from exposure to changes in the purchasing power of the currency.
- Application of the closing exchange rate instead of the average exchange rate for the year to the consolidated statement of comprehensive income, in the case of Argentine companies. For this purpose, all amounts need to be restated using the variation experienced by the general price index from the date on which expenses and income were recorded in the consolidated comprehensive profit and loss statement.