CERTYNEX IFRS ACADEMY

Aubelune operates a four-star hotel, tested as a cash-generating unit at 31 December 20X1. Every year, it refreshes rooms (paint, bedding) to keep its current standard. Management has also approved a project to upgrade to five stars, with works planned in 20X3 and higher room rates afterwards; no works had been incurred at the year-end. Which projections comply with IAS 36?

Include the upgrade works and the higher rates, since the project is approved, and exclude the annual refresh, which will become unnecessary after the works.

Include the annual room refresh and exclude both the upgrade works and the higher rates.

Exclude both the annual refresh and the upgrade, as all future capital expenditure is excluded from value in use.

Include the annual refresh and the upgrade works, but not the higher rates.