IFRS 13 F.V. Measurement

Hi Mike,

When we estimate F.V. of a liability, we are given three factors relative to risk:
1. Risk adjustment – uncertainty about cash flows 6%
2. Risk-free rate of Gov. bonds 4%
3. Entity’s non-performance risk 2%

We discount the cash flows using 4%+2%. Can you explain more about why we use 2 and 3 without considering 1. And if 1 risk is not 6%, any indication we should use the lower or higher one?

Thanks,
Qin