Example: On January 1, 2005 Zarlascht Inc. purchased a building for $2 million. Its estimated useful life at that date was 20 years and the company uses straight line depreciation method. On December 31, 2009 the government embarked on a plan to construct a fly-over adjacent to the building and the related installation reduced the access to the building thereby decreasing the value of the building The company estimated that it can sell the company for $1 million but it has to incur costs of $50,000. Alternatively, it if continues to use it the present value - - o Task: Determine the impairment of the building, if any? Question 6: Reversal of Impairment Loss If due to any event the impaired asset regains its value the gain is recorded in income statement to the extent of original impairment loss and any excess is considered a revaluation and is credited to revaluation surplus Example: Let us extend the example of Zarlascht Inc. In 2010 the government constructed a service road parallel to the high way which improved the recoverable amount to $1.4 million. Depreciation for 2010 was $0.12 million