CERTYNEX IFRS ACADEMY

Market interest rates rise sharply in 20X1. Amarante operates car parks whose prices are contractually indexed to inflation. A sensitivity analysis performed in 20X0 showed that an increase in rates would come with a comparable increase in future cash flows, so that a significant fall in the recoverable amount would be unlikely. Nothing has changed in the contracts since then. What should be concluded for 20X1?

Amarante must recognise an impairment loss proportional to the rate increase.

Amarante must reduce its forecast cash flows by the amount of the rate increase, without further analysis.

A formal estimate of the recoverable amount is mandatory in all cases, because an increase in market rates is among the indications listed by the standard.

Amarante may refrain from a formal estimate, since the previous analysis shows that a significant fall in the recoverable amount is unlikely.