## Ias 36 post tax discount rate

single asset company because NZ IAS 36 requires that the discount rate must reflect the discount rate because WACC is a post-tax discount rate. Common ble amount, Value in use, Discount rate, Cash flows, Fair value, CGU IAS 36 – International Accounting Standard, Impairment of Assets a post-tax discount rate would require more comprehensive calculation of value in use (IAS 36: BCZ81 The carrying amount is the amount at which an asset is recognised after deducting The discount rate(s) shall be a pre-tax rate(s) that reflect(s) current market Für die Zwecke der Nutzungswertbestimmung nach IAS 36 Impairment Das CAPM des IAS 36 (Pre-Tax Discount Rates - The CAPM Implied by IAS 36). HHL Working Paper No. 114. 30 Pages Posted: 21 Dec 2012 Last revised: 7 Jan 2013 .

## models, the discount rate and the treatment of lease liabilities. ROU assets are non-financial assets in the scope of IAS 36 of a CGU post IFRS 16. In practice

IAS 36 requires the use of pre-tax cash flows and pre-tax discount rates in the impairment test. In practice, primarily because of the widespread use of the Capital Asset Pricing Model — post-tax costs of equity are generally determined and used in the entity’s computations of the discount rate. Discounting post-tax cash flows at a post-tax discount rate and discounting pre-tax cash flows at a IAS 36 requires calculating value in use using pre-tax cash flows and a pre-tax discount rate. Such a requirement results from the fact that tax cash flows add complexity to value in use calculation. However, rates that can be observed on the market are generally post-tax, so in practice value in use is often calculated with post-tax cash flows and a post-tax discount rate. requirement in IAS 36, calculate the pre-tax discount rate as the rate that is needed to discount pre-tax cash flows in order to reach the same value as calculated by discounting post-tax cash flows using the post-tax discount rate (see example in paragraph BCZ85 of the Basis for Conclusions on IAS 36, reproduced in Appendix A). 5. IAS 36 also requires an entity to disclose the pre-tax discount rate(s) applied to the cash flow projections (paragraph 134(d)(v) of IAS 36). 6. It is important to bear in mind that the taxes referred to in the terms ‘pre-tax’ and ‘post-tax’ refer to income taxes payable by an entity on the income generated by Based on information about the subsidiary’s industry, the market expects the growth of 5% per year in average for the next 5 years, and then 2% in the long term. These rates are nominal and include the effect of inflation. Pre-tax discount rate determined based on company’s cost of capital is 8% p.a.

### IAS 36 can complicate calculating the The 'appropriate' pre-tax discount rate using an iterative process: 2013. 2014 prefer to use post-tax discount rates and .

amounts of certain assets (i.e. now at fair value) and their tax base (which remains IAS 36 permits the reallocation of goodwill between CGUs after to its initial In this case, care is needed to ensure that the appropriate discount rate is used. Estimating value in use: using a pre-tax discount rate that reflects the specific risks of each asset or 4.2 IAS 36 and IAS 10 'Events after the Reporting Period'. 16 May 2018 In practice, post-tax discount rates and cash flows are used which theoretically give the same answer but the need to consider deferred taxes IAS 36, 'Impairment of assets', requires the carrying amount of a cash- Value in use calculated using post-tax cash flows and a post-tax discount rate would. According to IAS 36.55, the discount rate should reﬂect the time value of money and the CF Cash ﬂow after investing, before interest, amortization and taxes. IAS 36 can complicate calculating the The 'appropriate' pre-tax discount rate using an iterative process: 2013. 2014 prefer to use post-tax discount rates and . IAS 36 requires the use of pre-tax discount rates when determining. VIU. In practice, post-tax costs of equity are generally used in the computation of the discount

### • Determining the appropriate discount rate to apply • The impact of taxation on the impairment test, given the requirement in IAS 36 to measure VIU using pre-tax cash flows and discount rates • Ensuring that the recoverable amount and carrying amount that are being compared are consistently determined

23 Oct 2012 IAS 36. □ Requires VIU to be determined using pre-tax cash flows and a pre-tax discount rate. In practice. □ WACC is estimated on a post-tax WACC applied in CGU's for internal impairment tests, with respect to IAS 36. It is quite common that companies disclose a post-tax discount rate, since WACC

## regulations concerning the discount rate in IAS 36 are also applicable to WACC is a post-tax figure but IAS 36 requires a pre-tax calculation.24 Hence the

We assume the long-term growth rate to be 2% and your pre-tax discount rate is 8%. Then we can apply the growing perpetuity formula which is the cash flow after amounts of certain assets (i.e. now at fair value) and their tax base (which remains IAS 36 permits the reallocation of goodwill between CGUs after to its initial In this case, care is needed to ensure that the appropriate discount rate is used. Estimating value in use: using a pre-tax discount rate that reflects the specific risks of each asset or 4.2 IAS 36 and IAS 10 'Events after the Reporting Period'. 16 May 2018 In practice, post-tax discount rates and cash flows are used which theoretically give the same answer but the need to consider deferred taxes IAS 36, 'Impairment of assets', requires the carrying amount of a cash- Value in use calculated using post-tax cash flows and a post-tax discount rate would. According to IAS 36.55, the discount rate should reﬂect the time value of money and the CF Cash ﬂow after investing, before interest, amortization and taxes. IAS 36 can complicate calculating the The 'appropriate' pre-tax discount rate using an iterative process: 2013. 2014 prefer to use post-tax discount rates and .

Estimating value in use: using a pre-tax discount rate that reflects the specific risks of each asset or 4.2 IAS 36 and IAS 10 'Events after the Reporting Period'. 16 May 2018 In practice, post-tax discount rates and cash flows are used which theoretically give the same answer but the need to consider deferred taxes IAS 36, 'Impairment of assets', requires the carrying amount of a cash- Value in use calculated using post-tax cash flows and a post-tax discount rate would. According to IAS 36.55, the discount rate should reﬂect the time value of money and the CF Cash ﬂow after investing, before interest, amortization and taxes. IAS 36 can complicate calculating the The 'appropriate' pre-tax discount rate using an iterative process: 2013. 2014 prefer to use post-tax discount rates and . IAS 36 requires the use of pre-tax discount rates when determining. VIU. In practice, post-tax costs of equity are generally used in the computation of the discount regulations concerning the discount rate in IAS 36 are also applicable to WACC is a post-tax figure but IAS 36 requires a pre-tax calculation.24 Hence the