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Discount rates - IASB Research Project


Project History

Many requirements of IFRS refer to, or specify, discount rates that entities should use to discount estimated future cash flows. However, those requirements define or specify different discount rates, cash flows and ther components of the calculations, depending on the objective of the particular IFRS.

During the 2011 Agenda Consultation, the IASB learnt that the reasons for using different discount rates are not well understood by constituents and, moreover, some respondents suggested that such differences cause IFRS requirements to be inconsistent.

Therefore, the IASB decided to commence a research project to examine discount rate requirements in IFRS and assess whether there are 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.

Latest Developments

At its March 2017 meeting, the IASB noted that the project has two outputs:

  1. the project findings; and

  2. a list of matters for future staff consideration in standard-setting work relating to discount rates and other aspects of present value measurements.

The IASB decided that:

  1. it will not seek feedback from the public on the research outputs; and

  2. no further work on the research project is needed to meet its objectives.

The two output resulting from the project is expected to be published by the IASB in February 2019.

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