The use of an unrealistically low discount rate could lead to a lessee recording a leased asset at an amount exceeding the fair value of the equipment, which is generally prohibited in IFRS.

Question

Quizplus · Accepted Answer

Using an unrealistically low discount rate increases the present value of lease payments, potentially leading to a lease asset value exceeding the fair value, which IFRS standards aim to prevent.

The Use of an Unrealistically Low Discount Rate Could Lead