When Measuring a Liability at Present Values,the Discount Rate to Be

question 1

Multiple Choice

When measuring a liability at present values,the discount rate to be used,according to paragraph 47 of AASB 137,is:

• A) The pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability.
• B) The after-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability.
• C) The pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability, and shall also reflect risks for which future cash flows have already been adjusted.
• D) The pre-tax risk free rate.
• E) The pre-tax rate for a government bond of the equivalent duration.

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Definitions:

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