The Use of an Unrealistically Low Discount Rate Could Lead

question 49

True/False

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.

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Definitions:

Effort Justification

The phenomenon where people attribute a greater value to outcomes they have put effort into achieving, regardless of the actual value.

Cognitive Dissonance Theory

A psychological theory that suggests discomfort arises when an individual holds contradictory beliefs, values, or attitudes, leading them to change one to reduce the dissonance.

Long-term Relationships

Romantic or platonic connections between individuals that are maintained over a prolonged period, often characterized by mutual support and commitment.

Cognitive Dissonance Theory

A theory that suggests an uncomfortable tension arises from holding contradictory cognitions (e.g., beliefs, attitudes) simultaneously, leading to efforts to reduce the dissonance.