IAS 36/AASB 136 requires the use of discounting techniques to assign a 'value in use' to assets.
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IAS 36/AASB 136 requires the use of discounting techniques to assign a 'value in use' to assets. The discount rate used is required to take into account the risks associated with the asset for which the future cash flows are being estimated. Consider the implications of applying this in practice by determining how you would derive the present value of an asset in the transport industry and what risk premium you would apply. Detail how you would justify your approach to shareholders.
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Accounting Theory
ISBN: 9780470818152
7th Edition
Authors: Jayne Godfrey, Ann Tarca, Allan Hodgson, Jane Hamilton, Scott Holmes
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