Project objective
Many IFRSs specify, or refer to, the discount rate that must be used to discount estimates of future cash flows. Different Standards specify different discount rates, depending on the objective of the particular IFRS. Views received during the agenda consultation suggest that the reasons for using different discount rates are not well understood, with some respondents suggesting that such differences cause IFRS requirements to be inconsistent. This research project examines discount rate requirements in IFRS, and assesses whether there any inconsistencies that the IASB should address.
The research on discount rates focuses on reviewing measurements that already require use of present value technique and for which the objective of measurement is not fair value.
This review includes:
- Present value measurement objectives set in individual standards;
- Discount rate components included in the present value measurement;
- Measurement methodology;
- Disclosure requirements; and
- Definitions and terms used.
In conducting the research, we mostly rely on a desktop study of requirements and related literature, supplemented by interviews with a small selection of stakeholders.