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TMS 29 Inflation Accounting in Turkish Company Reports in 2026: Comparing Results
Why can inflation change the meaning of profit growth?When a company compares money from different dates in an environment of rising prices, a unit of currency does not always retain the same purchasing power. Nominal revenue may rise while showing a smaller increase once the earlier period is put on a comparable basis. Some Turkish companies' reports therefore include inflation accounting under TMS 29. Readers need to understand its effect before calculating growth rates.
This reading guide's sources were reviewed on 8 October 2026. Its simplified fictional examples are for learning and do not replace preparing a company's financial statements or interpreting an individual's tax position. The title's year is the review year. A standard or guide appearing on a website does not mean every Turkish entity uses the same treatment in every period. We will read the basis of preparation, distinguish the items involved and make consistent comparisons without adjusting figures a second time after they have already been restated.
The standard, its scope and functional currencyThe primary reference is TMS 29 in the official standards issued by the Public Oversight, Accounting and Auditing Standards Authority, KGK. The standard concerns an entity's functional currency being that of a hyperinflationary economy, rather than its address or listing location alone. Operating in Türkiye or presenting some amounts in lira is therefore insufficient to determine the treatment without reading the report's basis of preparation.
Start with the notes on functional currency, presentation currency and accounting framework, then read the inflation section. One group may include entities with different functional currencies, requiring consolidation and translation consistent with those bases. Do not multiply an entire report by one factor simply because you know an annual inflation rate. Ask how the statements have already been prepared and what the figure you intend to compare includes.
Check regulatory scope before generalising about 2026Türkiye has KGK standards, the SPK framework for entities within its scope and specific rules for financial sectors. Financial reporting Communiqué II-14.1 recognises sector-specific regulations for financial institutions under its provisions. Do not transfer instructions for a listed manufacturer to a bank, insurer or entity using another framework without checking applicability.
Read the institution's report for the relevant period, the number and date of any regulatory decision it cites, and the competent authority's current text. Decision indexes may change, while postponement or withdrawal decisions alone do not explain detailed application for every entity. This guide does not assert that all banks apply or postpone TMS 29 in 2026. When documents do not establish the scope, state that the basis of treatment needs verification rather than filling the gap with a general assumption.
The Istanbul Financial Centre in an archive photograph from September 2023.
What does expressing statements in common purchasing-power units mean?The treatment restates information that requires adjustment into the measuring unit current at the reporting period's end, reducing the difficulty of comparing money from different dates. It is neither simply converting the currency into dollars nor estimating every asset's market price. Consult KGK's implementation guide on financial reporting in hyperinflationary economies when you need detailed explanations and examples.
For practice, imagine an asset purchased for 1,000 units when a fictional price index stood at 100, rising to 150 at the reporting date. The simplified restatement factor is 1.5. Applied to an eligible amount under the example's assumptions, it gives 1,500, but does not mean another asset was purchased or cash increased by that amount. The example explains measurement; it does not calculate complete financial statements or the asset's impairment tests.
Monetary and non-monetary itemsA monetary item concerns money held or amounts receivable or payable in money under its definition. A non-monetary item carried at historical cost may require restatement according to its measurement basis. Do not classify an item from its abbreviated label alone: contractual characteristics can affect classification and treatment. Read the accounting policy and notes.
For a conceptual comparison, cash of 1,000 at the reporting date differs from a machine acquired for 1,000 at an earlier date. Restating a historical machine's measurement does not increase the cash balance. A non-monetary item already carried at a current period-end amount may also require different treatment from one at historical cost. Do not multiply every asset and liability by the same index factor; each adjustment requires understanding the item's origin date, measurement basis and contractual features.
The monetary position and its associated gain or lossThe result may include a gain or loss on the net monetary position, distinct from sales profit or cash received into an account. The standard requires this result to be shown separately as part of the treatment. Read the relevant note when it materially affects net profit, and do not treat it as sales revenue or a payment from an outside party.
Imagine an entity holding more monetary assets than monetary liabilities over a period of rising prices: its monetary position can lose purchasing power. The effect can differ when monetary liabilities predominate, but this does not make borrowing costless or always beneficial. Interest, timing, repayment terms and liquidity remain separate factors. Understanding an accounting item does not establish a general financing recommendation.
Inventories, assets and depreciation: consider timingInventory may accumulate at several dates, machinery may be older than inventory, and additions and disposals may occur at different times. Restatement factors can therefore differ within one account. The effect can also appear in cost of sales or depreciation when calculating the period's result, rather than being confined to the closing asset balance.
For practice, assume two assets have equal nominal costs, but one was bought before prices rose and the other at period end. Applying one factor to both loses the timing difference. When analysing a profit margin, check whether revenue and its costs use the same measurement basis. Before attributing a lower margin to weak pricing, distinguish the notes' explanations of inflation-accounting effects and changes in product mix.
Restated comparatives can differ from the old annual reportA report applying this treatment may express the previous period in the measuring unit current at the new reporting period's end. The prior-year amount in the new report may therefore differ from the amount originally published. Use compatible comparative columns and explanatory notes rather than choosing a smaller figure from an old file to produce a larger growth rate.
Suppose the original prior-year report showed revenue of 100, restated to 130 in the current comparison, while current revenue is 140. Comparison with the original figure gives 40% growth; comparison with the restated figure gives approximately 7.7%. The example shows why the calculation's basis must be stated. Do not call the first result real growth or label the restated amount an error merely because it differs from last year's archive.
Skyland towers in Istanbul's Seyrantepe district, in an archive photograph from May 2024.
Do not adjust the same figure twiceA common mistake is downloading restated statements and multiplying all their figures by a price index again to make them “real”. A second adjustment can distort the comparison. Read the preparation note first, identify the purchasing-power date for each column and then design the calculation. Inflation in the economy does not mean every figure needs another adjustment from you.
Comparing reports from different dates may require a common measurement basis, but that is a disclosed analytical exercise using compatible data. Retain the published figures separately from your converted version and document the formula, period and index. Do not treat already restated amounts inconsistently with original amounts. Separate the teaching calculation from official statements so your table is not recirculated as a company publication.
Deriving a standalone quarter from cumulative reportsSubtracting six-month results from nine-month results may seem an easy way to obtain the third quarter. However, if each cumulative period uses purchasing-power units current at its own end date, subtracting raw figures can mix different measuring units. Use the report's quarterly column when available, or check how to express the amounts on one basis before deriving a result.
For a teaching example, suppose the six-month result is 100 in end-June units and the nine-month result is 160 in end-September units. If converting the 100 into September units produces 110 under the example's assumptions, the compatible difference is 50 rather than 60. Do not apply this fictional factor to a real case without knowing its framework, index and details. The point is to explain why automatic subtraction can fail, not to replace the company's report.
Cash flows still matterInflation accounting does not remove the need to analyse cash. Read operating, investing and financing cash flows and the notes explaining their preparation. In its implementation-guide update dated 27 September 2024, KGK added an example for preparing a cash-flow statement for entities restating under TMS 29 or the relevant BOBİ FRS section. The update date is not a universal application date for every institution.
Distinguish a change in carrying amount from cash movements during the period. When restatement increases an asset's amount, do not record that illustrative increase as a cash receipt. If measurement items raise profit, also ask about operating cash flows, collections and inventories. Differences may be legitimate and explained, but readers need to understand their source before describing the company's overall result as improved liquidity.
Financial reports and tax returnsGeneral-purpose financial reporting rules can differ from tax computation or tax-return rules even when both use the expression inflation accounting. Do not derive a tax amount or deduction entitlement from an accounting-standard paragraph without tax provisions applicable to the entity and period. Equally, do not assume restated accounting profit automatically equals the taxable amount.
Record the financial reporting framework in your comparison file, and leave tax calculations outside the conclusion if you have not gathered their own sources. When the report includes a tax effect or deferred tax, read the company's explanation. This defines the analysis's scope rather than avoiding the question: it prevents transferring a published-statement figure into an individual tax obligation unsupported by the available data.
A quick reading table| Comparison item | What to check | The distinction explained here |
|---|---|---|
| Scope | Framework, functional currency and regulator | Company location alone does not determine application. |
| Monetary and non-monetary items | Classification and measurement basis | Do not adjust every line using one factor. |
| Monetary position | The note and its effect on the result | A gain or loss does not automatically represent a cash receipt. |
| Previous period | The comparative column and restatement | The old annual report may show different amounts. |
| Quarter derived from cumulative figures | Measuring unit, scope and method | Subtraction requires a compatible basis. |
An exercise combining revenue, profit and the monetary positionSuppose a teaching report shows current revenue of 140 and a restated comparative of 130, operating profit of 20 against 18, and a monetary-position loss of five against two. You need to read the other result lines and taxes before calculating net profit. Do not combine selected components and present the result as the company's full profit.
A report can describe revenue growth on the restated basis and operating-profit growth, then explain a material monetary-position loss without treating it as cash paid. If operating cash flow is 10 against 15, present that as a different aspect of performance. Readers can then understand that sales growth, accounting results and cash flows are not interchangeable measures of one concept.
Before applying the exercise to an actual case, check the consolidation scope, functional currency, period, index, measuring-unit date and audit status. State whether the columns have already been restated and identify each figure's source. Consult the previous year's report to understand restatement, then use one report or a compatible basis for your calculation. Do not generalise from one entity to a whole sector or turn an accounting movement into a forecast of future profit.
Frequently asked questionsDoes every company in Türkiye apply TMS 29 in 2026?
Check the framework, functional currency, regulator, period and institution's report. Location alone does not establish the scope.
Does the inflation standard specify one decisive percentage?
It describes characteristics and a judgement about applicability. Do not use a single indicator recalled from memory to impose or rule out treatment for a particular report.
Should cash be multiplied by a restatement factor?
The distinction between monetary and non-monetary items is essential. Read the item's definition and stated treatment rather than adjusting every balance-sheet line in the same way.
Is a monetary-position gain cash income from a customer?
It is an accounting result within purchasing-power restatement, not automatically a cash collection or sale. Review cash flows and the relevant note.
Why has the previous year's figure changed in the new report?
It may have been restated on a new measurement basis or changed for other reasons. Check the comparative note before calculating growth or declaring an error.
Can I derive a quarter by directly subtracting cumulative figures?
Check the purchasing-power unit, scope and method. If they differ, raw subtraction is unsuitable without expressing the figures on a consistent basis.
Do restated financial statements directly establish the taxable amount?
Financial reporting and tax can use different frameworks. Tax calculations require their own provisions and data for the entity and period.
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