Oveview
A monetary correction system (or inflation adjustment) is applicable for certain assets to
manage the changes in the consumer price index (CPI) and the foreign exchange rates.
Monetary correction is a tax process which impacts the annual income tax return and is
required by the Chilean tax authority (SII). However, the correction has no impact on
financial accounting.
Monetary correction calculation is performed at the item level and the rules are depend on
whether the item is acquired nationally or imported and the period of the last
receipt.
| Item Classification |
| Last Receipt |
National |
Imported |
| 2nd Semester |
Highest price in year |
Price of last import |
| 1st Semester |
Highest price in 1st semester * semi-annual CPI |
Price of last import * semi-annual change of the foreign currency |
| Previous Year |
Book value at the end of previous year * annual CPI |
Book value at the end of previous year * annual percentage change of the
foreign currency |
Item Classification
Item is classified as national, imported or mixed. This classification is based on whether
a specific item is always acquired nationally or imported with the same currency. In case
the item is not solely acquired nationally or solely via import with same currency then the
item is classified as mixed.
Other scenarios for classification
Other receipts such as production material return, sales return and transfer receipt which
are part of a purchase or production receipt, are not considered to determine the item
classification.
| Period |
Description |
| 2nd semester |
Last purchase order/schedule receipt is recorded in the months July up to and
including December of the year, for which the monetary correction is
performed. |
| 1st semester |
Last purchase order/schedule receipt is recorded in the months January up to
and including June of the year, for which the monetary correction is
performed. |
| Previous year |
Last purchase order/schedule receipt recorded before the year, for which the
monetary correction is performed. |
| Base Cost |
Description |
| Highest price in year |
Highest purchase order/schedule inventory receipt transaction amount by unit
in the current year. This price includes receipt surcharges, landed costs and
inventory variances. |
| Highest price in 1st semester |
Highest purchase order/schedule inventory receipt transaction amount by unit
in first semester. This price includes receipt surcharges, landed costs and
inventory variances. |
| Price of last import |
Last Purchase order/schedule inventory receipt transaction amount by unit.
This price includes receipt surcharges, landed costs and inventory variances.
|
| Book value at the end of previous year |
Average actual inventory value for each unit at the end of previous
year. |