TMS 29 (IAS 29) in Turkey: Method and How to Read Inflation-Adjusted Statements

In a period of high inflation, unadjusted financial statements add together amounts that arose at different dates with different purchasing power. A machine bought a few years ago and a sale made this month are shown in the same “lira”. TMS 29 aims to remove this lack of comparability by bringing the statements to the purchasing power at the end of the reporting period. This article explains the standard’s basic mechanism and how a manager should read the adjusted statements; for technical application, the text of the standard is the reference.

When is an economy hyperinflationary?

TMS 29 does not set an exact rate; when to apply it is a matter of judgement (paragraph 3). The standard lists characteristics of the economy. One is a cumulative inflation rate over three years approaching or exceeding 100%. Others include the majority of the population preferring to keep wealth in non-monetary assets or a relatively stable foreign currency, and prices, wages and interest rates being linked to a price index.

In Türkiye, application has been set by KGK announcements. According to KGK’s announcement of 23 November 2023, as referred to in its Announcement 2024-31, restatement under TMS 29 or BOBİ FRS Section 25 is required for annual reporting periods ending on or after 31 December 2023.

The basic mechanism

Item	Treatment	Standard
Monetary items (cash, receivables, payables)	Already in the period-end measuring unit; not restated	para. 12
Index-linked assets and liabilities	Adjusted to period-end value under the terms of the agreement	para. 13
Non-monetary items (inventory, property, plant and equipment)	Restated using a general price index from the date of acquisition, except those carried at current period-end amounts	para. 11, 14, 15
Equity items	Restated using a general price index from the dates contributed or arising (on first application, except retained earnings and revaluation surplus; any revaluation surplus from prior periods is eliminated) or from the beginning of the period	para. 24, 25
Income statement items	Expressed in the period-end measuring unit	para. 26
Gain or loss on the net monetary position	Included in profit or loss and disclosed separately	para. 9, 27–28
Statement of cash flows	All items expressed in the period-end measuring unit	para. 33
Comparative figures	Restated to the period-end unit using a general price index	para. 34

All entities reporting in the currency of the same economy use the same general price index (paragraph 37). If a restated amount exceeds the asset’s recoverable amount, it is reduced under the relevant standard (paragraph 19).

Hypothetical example

Hypothetical example — not based on a real company.

Suppose the general price index is 200 at the start of the year and 250 at the end (25% for the year). The company bought land for TRY 1,000,000 when the index was 100, and held TRY 1,000,000 in cash throughout the year.

Item	Historical amount (TRY)	Restatement	In period-end units (TRY)
Land (non-monetary)	1,000,000	× 250 / 100	2,500,000
Cash (monetary)	1,000,000	Not restated	1,000,000

While the cash stays the same during the year, its purchasing power falls. TRY 1,000,000 at the start of the year corresponds to TRY 1,250,000 in year-end units (× 250 / 200); assuming the company has no other monetary items, the difference of TRY 250,000 is a loss on the net monetary position. The standard notes that this gain or loss may be estimated by applying the change in the price index to the weighted average difference between monetary assets and monetary liabilities (paragraph 27). An entity with more monetary liabilities than monetary assets gains purchasing power.

How should a manager read the restated statements?

1. Real growth: Sales may have risen in nominal terms; once comparatives are brought to the same unit, the real change becomes visible. The management report should show nominal and real growth separately. For detail, see management reporting under high inflation.
2. Net monetary position: A large monetary loss shows that the company’s monetary assets (cash, receivables) exceeded its monetary liabilities during the year. This makes the inflation cost of working capital policy visible.
3. Gross margin: When inventories and cost of sales are restated, the “inflation profit” on sales made from older, cheaper stock shrinks. Pricing decisions should rest on the restated margin.
4. Equity: Equity items are also restated. Decisions on profit distribution should separately consider the difference between statutory records and restated statements.

Tax and statutory records

TMS 29 is a financial reporting standard. Inflation adjustment under Turkish tax legislation is governed by separate rules; when and how it applies should be assessed separately under tax legislation and with a tax adviser. The two adjustments may produce different results.

Common mistakes

• Getting the monetary/non-monetary split wrong: For example, classifying advances without looking at their nature.
• Not restating the comparative period: Prior-period figures must also be brought to the period-end unit (paragraph 34).
• Not keeping index and date records: Because non-monetary items are restated from their acquisition dates (paragraph 15), acquisition dates and amounts must be recorded. In the rare cases where detailed records of the acquisition dates of property, plant and equipment do not exist, the standard provides for an independent professional valuation to be used as the basis on first application (paragraph 16).
• Separating the restated statements from the management report: If management looks at nominal figures and the audited statements at restated ones, two different realities emerge.

What it means for management

TMS 29 makes financial statements comparable under high inflation. For management, the real value lies in two pieces of information the restatement reveals: how much of growth is real, and how much the monetary position costs the company. Both feed directly into pricing, working capital and financing decisions.

Sources last checked: 21 October 2026