CERTYNEX IFRS ACADEMY

To measure a building, Garrick applies a 10% discount because the entity's loan agreement forbids it from selling the building within five years. This ban would not follow the building to a buyer. What is the error?

The restriction is specific to the entity and not attached to the building: it is not a characteristic of the asset.

The discount should apply to the location and not to the condition of the building, since the condition of the building would already be reflected in the market price.

A 10% discount is too small; 20% should be used.

The discount should have been computed over the remaining term of the prohibition rather than as a flat rate.