QUESTION 3 (25 MARKS)

Quinn Bhd (QB) rents out boats to customers at Osem Glamping Park. These boats were bought on 1 January 2014 for RM1 million. The boats have no scrap value with estimated economic life of ten years.

The fair value of the boats was RM960,000 on 31 December 2015 and MB decided to adopt revaluation model to measure the carrying amount of the boats.

Unfortunately, in the year 2017, an accident took place and the business deteriorated significantly. Eventually, the fair value less cost of disposal of these boats was RM600,000 and the value in use was RM660,000 on 31 December 2017.

The demand for market shares of the boats has picked up and its recoverable amount was RM800,000 in the year 2019

Required:

a) Discuss the accounting treatment for the boats with the adoption of revaluation model

b) Compute the impairment loss of the boats in the year 2017

c) Discuss the accounting treatment for the boats in the year 2017