QUESTION 4

The property of the former administrative centre of Apollo Limited is owned by the company.

Apollo had decided in the year that the property was surplus to requirements and demolished the

building on 10 June 2021. After demolition, the company will have to carry out remedial

environmental work, which is a legal requirement resulting from the demolition. It was intended

that the land would be sold after the remedial work had been carried out. However, land prices are

currently increasing in value and, therefore, the company has decided that it will not sell the land

immediately.

Apollo uses the 'cost model' in IAS16 *Property, plant and equipment' and has owned the property

for many years.

Required:

Advise the directors how to treat the above in the financial statements for the year ended 31 May

2021.

(5 marks)