CAF-1 · Chapter 5 · Question 15 of 15
What type of discount rate should be used when calculating the value in use of an asset?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) A pre-tax rate that reflects current market assessments of the time value of money and risks specific to the asset.
Explanation
The discount rate must be a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the asset.
More IAS 36 Impairment of Assets MCQs
- Q2When calculating the 'value in use' of an asset for impairment testing, which discount rate should be applied to future cash flows?
- Q3An entity previously recognized an impairment loss on an asset carried under the cost model. If the reasons for the impairment…
- Q4Under IAS 36, when is an asset considered to be impaired?
- Q5Which of the following is defined as the 'value in use' of an asset?
- Q6Which of the following assets is OUTSIDE the scope of IAS 36 Impairment of Assets?