The draft financial statements of Plethora plc for the year to 31 December 20X9 are being prepared and the accountant has requested your advice on dealing with the following issues.(i) Plethora plc has an administration building which it no longer needs. On 1 July 20X9 Plethora plc entered into an agreement to lease the building out to another company.
The building cost $600,000 on 1 January 20X0 and is being depreciated over 50 years, based on the IAS 16 cost model. Plethora plc applies the fair value model under

IAS 40 Investment property and the fair value of the building was judged to be $800,000 on 1 July 20X9. This valuation had not changed at 31 December 20X9.


(ii) Plethora plc owns another building which has been leased out for a number of years. It had a fair value of $550,000 at 31 December 20X8 and $740,000 at 31 December 20X9.
(iii) Plethora plc owns a retail business which has suffered badly during the recession. Plethora plc treats this business as a separate cash generating unit.

The carrying amounts of the assets comprising the retail business are:

               $'000

Building 900

Plant and equipment 300

Inventory 70

Other current assets 130

Goodwill 40

An impairment review has been carried out as at 31 December 20X9 and the recoverable amount of the cash generating unit is estimated at $1.3m. 1 What is the amount of the revaluation surplus that will be recognised in respect of the building in (i)?
2. In respect of the building in (ii), how will the increase in value from $550,000 to $740,000 be accounted for?

3. When an impairment review is carried out, a potentially impaired asset is measured at what amount? 

A Fair value 

B Value in use

C Recoverable amount 

D Carrying amount

4. What will be the carrying amount of the inventory after the impairment loss in (iii) has been accounted for?