CERTYNEX IFRS ACADEMY

No asset-specific rate is observable in the market for a Wendrac plant. Which approach complies with IAS 36 for estimating the discount rate?

Start from the weighted average cost of capital, the incremental borrowing rate or other market rates, then adjust them for the asset-specific risks.

Use the interest rate on the loan that financed the plant, since it is observable.

Reuse, unchanged, the rate applied in the previous year's test.

Give up calculating value in use and use only fair value less costs of disposal, since the rate is not directly observable in an active market.