CERTYNEX IFRS ACADEMY

Short-term market interest rates have risen during the year. Pradel owns a hydroelectric plant with a remaining useful life of 35 years, and its analysis shows that the discount rate used for this asset is unlikely to be affected by this increase. What conclusion should be reached?

A formal estimate of the recoverable amount is not required merely because of this increase.

Pradel must raise its discount rate by the same number of points as short-term rates.

An increase in short-term rates can never be an indication, as only long-term rates are covered by the standard.

Pradel must formally estimate the plant's recoverable amount, because any increase in market rates requires it.