CERTYNEX IFRS ACADEMY

Navarre Cargo impaired a vessel at the end of 20X1, its value in use having been calculated with a discount rate of 9%. In 20X2, market interest rates fall markedly, which affects the discount rate applicable to the vessel. What must the entity do at the 20X2 reporting date?

Automatically reverse the whole loss recognised at the end of 20X1.

Recognise that a reversal indication exists and estimate the vessel's recoverable amount.

Do nothing: reversals are only considered for assets subject to a mandatory annual test.

Wait until the fall in rates has been confirmed over three years before any analysis.