CERTYNEX IFRS ACADEMY

The approved budget of Cimarel, a cement producer, forecasts a sharp rise in selling prices from next year. Forecasts published by the industry federation and by two economic institutes indicate, on the contrary, that prices will stagnate for several years. How should Cimarel approach its value in use projections?

Use its budget as it stands, since approval by management is enough to establish that the assumptions are reasonable

Give greater weight to external evidence and use its best estimate of conditions over the remaining useful life

Take the arithmetic mean of the budget and the external forecasts, without further analysis, so as to remain neutral

Use the most favourable assumption of the three sources, since value in use reflects the entity's point of view