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Note 3 - Functional and Presentation Currency and Unit of Account | 12 Months Ended
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Dec. 31, 2018
Functional and Presentation Currency Abstract |
Functional and Presentation Currency | 3. Functional and presentation currency and unit of account 3.1. Functional and presentation currency The Argentine Peso i s the functional and presentation currency of the Bank and its subsidiaries. All amounts are stated in thousands of Argentine pesos, unless otherwise stated. 3.2. Unit of account IAS 29 Financial Reporting in Hyperinflationary Economies requires an entity whose functional currency is the currency of a hyperinflationary economy, to state the assets, liabilities, income and expenses in terms of the measuring unit current at the reporting period. An economy is considered to be a hyperinflationary economy when, among other criteria, it has cumulative inflation of approximately 100% or more over a 3-year period. The Bank’s management took into account the increase in the levels of inflation suffered by the Argentine economy in the first months of 2018, applied the parameters established by IAS 29 and agreed with the consensus reached among local and international accounting standards that the Argentine economy should be considered as hyperinflationary. Consequently, IAS 29 has been applied to financial information prepared as from July 1, 2018. Additionally, the Bank’s management agreed with the b asis for conclusions and consequently followed the guidance issued by Argentine accounting standards setters by which the “general price index” for IAS 29 purposes is determined considering the Wholesale price index (WPI) through December 31, 2016 and the Consumer price index (CPI) beginning on January 1, 2017 and onwards. These indexes are published by the National Institute of Statistics and Census (INDEC). The general price index has increased 47.65% during 2018 and 24.80% during 2017. Under IAS 29 asset s and liabilities not already expressed in terms of the measuring unit current at the end of the reporting period are adjusted by applying a g eneral price index. The adjusted amount of a non-monetary item is reduced, in accordance with IFRS-IASB, when it e xceeds its recoverable amount. The impact of implementation of IAS 29 at the beginning of the first period of application is recognized in equity. All items in the statement of comprehensive income are expressed in terms of the measuring unit current at th e end of the reporting period. The gain or loss on the net monetary position is included in the Consolidated Statement of profit or loss. Since the Bank prepares its financial information based on a historical cost approach, it has applied IAS 29 as follow s: Restated the Consolidated statement of financial position as of January 1, 2017, which is the earliest financial information presented. Restated the Consolidated statement of financial position as of December 31, 2017. Restated the Consolidated statement of profit or loss, the Consolidated statement of comprehensive income, the Consolidated statement of changes in shareholders’ equity and Consolidated statements of cash flow for the year ended December 31, 2017, including the calculation and sepa rate disclosure of the gain or loss on the net monetary position. Adjusted the Consolidated statement of financial position as of December 31, 2018. Adjusted the Consolidated statement of profit or loss, the Consolidated statement of comprehensive income, the Consolidated statement of changes in shareholders’ equity and Consolidated statements of cash flow for the year ended December 31, 2018, including the calculation and separate disclosure of the gain or loss on the net monetary position. In order to app ly IAS 29 to the Consolidated statement of financial position, the Bank has applied the following methodology and criteria: Non-monetary items ha ve been restated by applying the general price index. The restated amount s ha ve been reduced to their recoverable value by applying the pertinent IFRS, if necessary. Monetary items ha ve not been restated. Assets and liabilities linked by agreement to changes in prices, such as index linked bonds and loans, have been measured in accordance with the perti nent agreement. The measurement of Investments accounted for under the equity method, have been determined based on financial information of the associate s and joint ventures prepared in accordance with IAS 29. Deferred income tax assets and liabilities ha ve been recalculated based on the restated amounts. As of January 1, 2017 all equity components, except retained earnings, have been restated by applying the general price index from the dates the components were contributed or otherwise arose. In subseque nt periods, all equity components have been restated by applying the general price index from the beginning of the period or the date of contribution, if later. In order to apply IAS 29 to the Consolidated statement of profit or loss, the Consolidated sta tement of c omprehensive i ncome and the Consolidated statement of cash flows, the Bank has been applied the following methodology and criteria: All items in the Consolidated statement of profit or loss, Consolidated statement of c omprehensive i ncome and Con solidated statement of cash flows have been expressed in terms of the measuring unit current at December 31, 2018. The gain or loss on the net monetary position is included in the Consolidated statement of profit or loss. The gain or loss generated by ca sh and cash equivalents is presented in the Consolidated statement of cash flows separately from cash flows from operating, investing and financing activities as a specific item in the reconciliation between cash and cash equivalents at the beginning and a t the end of the period. Below is a summary of the main adjustments in the application of IAS 29:
| December 31, 2017 | January 1, 2017
Equity before inflation adjustment (Note 2.2) | 31,776,490 | 20,578,655
Impact of IAS 29 adoption: |  |
· Increase in Non-monetary assets (tangible assets, intangible assets and non-current assets held for sale) | 2,486,482 | 504,728
· Increase Deferred income tax | (725,461) | (176,654)
Total impact of IAS 29 adoption | 1,761,021 | 328,074
Equity in terms of the measuring unit current at December 31, 2017 / January 1, 2017 | 33,537,511 | 20,906,729
Adjustment of mesuring unit | 15,979,144 | 17,615,005
Equity in terms of the measuring unit current at December 31, 2018 | 49,516,655 | 38,521,734
| December 31, 2017
Profit before inflation adjustment (Note 2.2) | 5,431,446
Impact of IAS 29 adoption: |
· Increase in Non-monetary assets (tangible assets, intangible assets and non-current assets held for sale) | 1,981,754
· Increase Deferred income tax | (548,807)
· Loss on net monetary position | (5,604,951)
Total impact of IAS 29 adoption | (4,172,004)
Profit or loss at in terms of the measuring unit current at December 31, 2017 | 1,259,442
Adjustment of mesuring unit | 600,069
Profit in terms of the measuring unit current at December 31, 2018 | 1,859,511

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