This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice (http://www2.deloitte.com/ca/en/legal/cookies.html) for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

Discount Rates [Completed]

Effective date:

The IASB has no plans to conduct a separate project on discount rates. Therefore, the project summary concludes this project.

Last updated:

February 2019

Overview

A discount rate is a rate that is used to determine the present value of future cash flows. Present value techniques serve to measure the fair value, value in use or other current value of an asset or a liability, as a method for initial or subsequent measurement.

Some IFRS Standards require or allow companies to use different discount rates for estimating future cash flows. In some cases, the differences are clearly justified because they reflect different risk factors or circumstances. In other cases, the reasons for the differences are unclear.

Standards that include requirements in relation to discount rates include:

From 2014 to 2017, the International Accounting Standards Board (IASB) conducted a research project on discount rates in IFRS Standards, with the objectives to:

  • investigate reasons for inconsistencies between requirements relating to discount rates in IFRS Standards; and
  • assess whether the Board should consider addressing those inconsistencies.

The Board’s investigation found that:

  • inconsistencies between requirements relating to discount rates in IFRS Standards arise in some cases in specifying either:
    • which types of inputs to use in a present value measurement technique; or
    • how to determine the amount of the inputs.
  • some of those inconsistencies arise because different IFRS Standards adopt different measurement bases. Other inconsistencies, mostly relating to entity-specific current value measurements, arise partly because different IFRS Standards were developed at different times and with different areas of focus.

The project had two outputs:

  • the research findings; and
  • a summary listing matters that the staff will consider in the future when developing recommendations for the Board on present value measurement requirements.

The Board will use those outputs in other projects in considering:

  • whether and how to address some of the inconsistencies identified; and
  • how to avoid creating unjustifiable inconsistencies in the future.

The Board has no plans to conduct a separate standard-setting project on discount rates.

The Project Summary was published in February 2019 providing an overview of research discussed by the Board.

 

Other developments

February 2019

On February 28, 2019, the IASB published Discount rates in IFRS Standards project summary. The Board will not conduct any further work regarding this project.

December 2018

On December 14, 2018, the IASB® staff updated the work plan to indicate that the Board expects to issue a Project Summary in February 2019.

September 2018

On September 20, 2018, the IASB staff updated the work plan to indicate that the Board plans to issue a project summary in December 2018.

July 2018

On July 18, 2018, the IASB staff updated the work plan to indicate that the Board plans to issue a project summary in Q4/2018.

May 2018

On May 25, 2018, the IASB staff updated the work plan to indicate that the Board expects to issue a Research Summary in Q3/2018.

March 2018 

On March 23, 2018, the IASB staff updated the work plan to indicate that the Board expects to issue a Research Summary in June 2018.

January 2018

On January 26, 2018, the IASB Staff updated this project to indicate that the IASB now expects to issue a Research Summary in Q2/2018. 

July 2017

On July 21, 2017, the staff of the IASB updated the work plan to indicate that the IASB expects to issue a Research Summary in the first half of 2018.

June 2017

In June 2017, the IASB staff updated the work plan to indicate that the IASB expects to issue a Research Summary in September 2017.

March 2017

On March 23, 2017, the IASB staff updated the Work Plan in respect of this project to indicate that this project is now in a drafting stage and that the IASB expects to publish a Research Summary by September 2017.

December 2016

On December 15, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish a Research Summary by June 2017.

September 2016

On September 23, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish a Research Summary by March 31, 2017.

July 2016

On July 20, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish a Research Summary sometime before January 31, 2017.

October 2015

The IASB Work Plan for October 30, 2015 updated the planned next steps for this project.

December 2012

This project was added to the IASB’s Work Plan as a research project.

 

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.