Analyse how the different ways of translating subsidiaries in hyperinflationary economies change financial statements and ratios

A highly inflationary economy is usually one with cumulative inflation of about 100% over three years. Under US GAAP the subsidiary's statements are remeasured with the temporal method as if the parent's currency were functional, so non-monetary assets stay at historical rates and remeasurement gains or losses hit net income. Under IFRS the statements are first restated for inflation using a general price index, with non-monetary items indexed and a purchasing power gain or loss on the net monetary position in profit or loss, then translated at the current rate. Holding net monetary liabilities during inflation creates a purchasing power gain. The trap is translating at the current rate without restating first, which understates fixed assets, and more so the higher the inflation.