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IAS 36 Impairment

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IAS 36 Impairment

  • This topic has 2 replies, 2 voices, and was last updated 6 years ago by gangsta1.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • August 23, 2018 at 1:39 am #468991
    gangsta1
    Member
    • Topics: 75
    • Replies: 10
    • ☆☆

    Sir i am looking at one of the external indicators of impairment which goes as follow:

    1) An increase in the market interest rate or market rate of return on investments likely to affect the discount rate used in calculating value in use.

    My question sir, how can the above affect the calculation of the value in use?

    August 23, 2018 at 9:29 am #469056
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7171
    • ☆☆☆☆☆

    Hi,

    If the interest rate is increased then the discount factor will fall and the present value will fall too as we are multiplying the cash flows by the lower discount factor, therefore there may be a potential impairment due to the reduced value in use.

    Thanks

    August 25, 2018 at 2:05 am #469307
    gangsta1
    Member
    • Topics: 75
    • Replies: 10
    • ☆☆

    Thank you sir.

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • The topic ‘IAS 36 Impairment’ is closed to new replies.

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