CERTYNEX IFRS ACADEMY

Belcourt owns a fleet of vessels with a remaining useful life of six years. In 20X1, market rates of return rise sharply and Belcourt considers that its discount rate will be affected. The last calculation showed a recoverable amount only 2% above the carrying amount, and no sensitivity analysis has been performed. What should be concluded?

No estimate is required, since the recoverable amount exceeded the carrying amount at the last calculation.

No estimate is required, because an increase in market rates of return is never an indication of impairment for assets with a short remaining useful life, such as the vessels.

A formal estimate of the recoverable amount is needed: previous headroom is small, the discount rate is affected and no analysis shows a lack of sensitivity.

Belcourt may simply mention the rate increase in the notes.