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If interest rates increase this gives rise to a possible indicator of impairment.
Why?
Thanks
hi the interest rate impacts on impairment
the rule is we take the higher of the nsp and the value in use , the increase in interest rate will therefore affect the value in use i.e. the p.v of future cash flows will decline due to sharp discounting now if you apply this to the initial rule of carrying value must exceed recoverable amount (if value in use is the basis of recvrble amount) there is an impairment that exists hope this helps quite hard to explain this point but its more advanced
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