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An asset's value-in-use discount rate is largely insensitive to short-term market rate increases (the asset has a LONG remaining useful life). Under Ind AS 36, the entity:
AMust immediately impair the asset
BMust apply the new short-term rate to the VIU calculation
CNeed NOT make a formal estimate of recoverable amount if the discount rate is unlikely to be materially affected (paragraph 15 relief)
DMust still perform a full recoverable amount estimate when short-term rates rise
Answer & Solution
Correct answer: C. Need NOT make a formal estimate of recoverable amount if the discount rate is unlikely to be materially affected (paragraph 15 relief)
Paragraph 15: relief from formal RA estimate when (a) discount rate unlikely affected (e.g. long-life asset and short-term rate changes), OR (b) prior sensitivity shows the increase wouldn't material impair. Avoids unnecessary computation when materiality is clearly not at stake.
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