according to pas 36, when measuring an asset’s value in use, the discount rate to be used in discounting the estimated cash flows should be the
According to PAS 36, what should be the discount rate used when measuring an asset’s value in use?
Answer:
When measuring an asset’s value in use according to PAS 36 (Impairment of Assets), the discount rate used in discounting the estimated future cash flows should be the asset’s pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset. This discount rate is applied to the estimated future cash flows in order to calculate the present value of those cash flows. The use of an appropriate discount rate is crucial in determining the recoverable amount of the asset and assessing whether there is any impairment in its value.