doc__table__1587

| A6 | However, the traditional approach may not appropriately address some complex measurement problems, such as the measurement of non-financial assets for which no market for the item or a comparable item exists. A proper search for ‘the rate commensurate with the risk’ requires analysis of at least two items — an asset that exists in the marketplace and has an observed interest rate and the asset being measured. The appropriate discount rate for the cash flows being measured must be inferred from the observable rate of interest in that other asset. To draw that inference, the characteristics of the other asset's cash flows must be similar to those of the asset being measured. Therefore, the measurer must do the following: (a) identify the set of cash flows that will be discounted; (b) identify another asset in the marketplace that appears to have similar cash flow characteristics; (c) compare the cash flow sets from the two items to ensure that they are similar (for example, are both sets contractual cash flows, or is one contractual and the other an estimated cash flow?); (d) evaluate whether there is an element in one item that is not present in the other (for example, is one less liquid than the other?); and (e) evaluate whether both sets of cash flows are likely to behave (i.e. vary) in a similar fashion in changing economic conditions.

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Source: EUR-Lex (Cellar) · retrieved 2026-11-08 · Text as adopted (Official Journal); later amendments are not incorporated in this text.