You are the Chief Financial Officer of XYZ Ltd. The Chief Executive Officer (CEO) of XYZ has requested a meeting with you to discuss the measurement model that XYZ Ltd uses for its property, plant and equipment. Currently the company accounts for its property, plant and equipment using the cost model. The CEO believes that the property, plant and equipment are worth 30% more than the current book value. The CEO is of the view that the company would be better served if it adopted the revaluation model instead of the cost model. The CEO has asked you to prepare report detailing the effect of adopting the revaluation model and bringing the assets up to the CEO's assessment of their value would have on the financial statements of XYZ Ltd, the implications of this change for the various stakeholders (with particular reference to shareholders, senior management and the company's major lenders) and the ability of the company to raise further capital.

REQUIRED:

Make a recommendation to the CEO as to whether the company should adopt the revaluation model for accounting for its property, plant and equipment. When assessing the impact of adopting revaluation model, you must refer to AASB 116 Plant Property & Equipment and cite relevant sections in your answers.