*What is the accounting issue here (clearly stated as a question) and what is the appropriate accounting treatment for this issue?

Building -

During 2018, there was indication that the carrying amount of the building might be impaired because a cement grinding company purchased the land adjacent to the building. At year-end, CBC performed an impairment test on the building by comparing the carrying amount of the building ($32,000,000) to the undiscounted cash flows related to the building ($44,000,000). The results of this test concluded that the building was not impaired.

The building was originally purchased at the beginning of 2010 for $30,000,000. At that time, the building was assumed to have a useful life of 30 years and no residual value. When the building was purchased, all the major component parts of the building were old and would need to be replaced in the near future. Thus, the entire amount of the purchase was allocated to the building.

The company uses the cost method to measure property, plant and equipment and depreciates assets other than land on a straight-line basis.

Subsequent to the purchase of the building, CBC made major improvements to the building. All improvements were completed in June of 2012. The company added a significant addition, and replaced all of the existing elevators, the roof and the windows. The contractor charged $15,000,000 for all of the work with approximately $300,000, $200,000 and $150,000 for the elevators, roof and windows respectively. The costs of these improvements were capitalized to the cost of the building. The new addition was expected to have a useful life of 20 years, the elevators 10 years, the roof 15 years and the windows 10 years.

At the end of 2018, CBC had the building appraised, and the fair value was estimated to be $20,000,000 and it would likely cost CBC $500,000 to dispose of the building. The expected future cash flows for the building are $2,000,000 per year. CBC determined the expected cash flows by approximating the amount that the company would have to pay if it had leased the building space rather than owning it. CBC has a credit-adjusted risk-free rate of 7%.