CERTYNEX IFRS ACADEMY

A trainee justifies the discount rate selected for the obligation of a defined benefit plan of Mirel SA at the reporting date. Which of his justifications is wrong?

I use the expected return on the fund's investments, that is 6%, because those investments will fund the benefits.

I use market yields, at the reporting date, on high-quality corporate bonds, and not a rate specific to the entity.

I do not take the entity's borrowing cost as the reference for the rate of the pension obligation at the year end.

I assess high quality by an absolute concept of credit quality (2013 explanation by the Interpretations Committee, which is not a standard), not relative to other issuers.