The property of the former administrative centre of Tyre Ltd (Tyre) is owned by the company. Tyre had decided in the year that the property was surplus to requirements and demolished the building on 10 June 2020. 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. Tyre 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 2020.
The property of the former administrative centre of Tyre Ltd (Tyre) is owned by the company. Tyre had decided in the year that the property was surplus to requirements and demolished the building on 10 June 2020. 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.
Tyre 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 2020.
Step by step
Solved in 2 steps
