Arlington Property Ltd. owns two large properties that it rents out to tenants on long-term leases. The company currently holds the properties in its books at depreciated historical cost, but intends to revalue each property to its deprival value. Full details of valuations of these properties are as follows:

Required:

a. Identify the deprival value of each property

b. Show the ledger accounts to record the revaluation of each property to its deprival value. You may ignore any depreciation for the current year.

c. Does the regular revaluation of property amount to a system of inflation accounting?

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Property A Property B Historical cost £4,700,000 £3,250,000 Depreciation Estimated selling price, net of selling costs Estimated cost to purchase a similar property Present value of estimated future rents £550,000 £670,000 £3,300,000 £3,340,000 £3,100,000 £5,260,000 £5,100,000 £5,750,000