What is the effect of using the discount rate

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Question - Casey Co Ltd is assessing the recoverable amount of some land it invested in 5 years ago at a cost $600 000. Management has sought independent valuation advice that indicates that the land may be sold in 6 years' time for $800 000. Since the land is not generating any cash flows, this is its undiscounted recoverable amount. The appropriate discount rate is estimated to be 7%. The present value of $1 received in 6 years' time at a discount rate of 7% is 0.6663. What is the effect of using the discount rate on the need to write down the value of the asset?

Reference no: EM132940184

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