On 1 July 2017, Blenheim Ltd purchased an item of machinery for $280,000. On this date it was estimated that the item of machinery had a useful life of seven years and zero residual value. Blenheim Ltd uses the cost model to measure items of property, plant and equipment and the straight-line method of depreciation. Blenheim Ltd has a 30 June reporting date.

In relation to the item of machinery, Blenheim Ltd has identified indicators of impairment for the reporting periods ending 30 June 2019 and 30 June 2020 and indicators for a reversal of impairment for the reporting period ending 30 June 2021. The fair value less costs of disposal and the value in use of the item of machinery on these dates were as follows:

Date Fair value less Value in use

costs of disposal

30 June 2019 $170,000 $180,000

30 June 2020 128,000 120,000

30 June 2021 125,000 130,000

1. Explain how the item of machinery would be accounted for on 30 June 2019 if Blenheim Ltd used the revaluation model to measure items of property, plant and equipment and, on this date, the fair value of the item of machinery was $174,000 and costs of disposal were $4,000. (3 marks)