Skip to main content
IFRS Academy

CERTYNEX IFRS ACADEMY

Search the Academy

Home
My learning path
Exercises & quizzes
Cases
Workpapers
Exams
My progress

JudgmentExpertPublished

Question · Discount rate

Fontrebel is testing the cash-generating unit of its distribution subsidiary located in a country with high monetary instability. Management proposes discounting the cash flows, estimated pre-tax, at the group's post-tax weighted average cost of capital, with no adjustment. It points out that the subsidiary benefits from very favourable intragroup financing and that the cash flows already include, through weighted scenarios, the expropriation risk specific to the country. The cash flows, prepared in local currency, do not, however, reflect any currency risk. Write a judgement memo on the discount rate.

Your answer

Judgment question: compare your answer with the criteria and the model explanation.

← Back to the concept