Fontbrune applies the revaluation model to the building of a hotel it operates; the hotel generates cash inflows that are largely independent of those of its other assets, so its recoverable amount can be determined individually. The building has just been revalued to its fair value at the reporting date: its revalued carrying amount is 520,000. Its costs of disposal would be 31,000; its recoverable amount, equal to its value in use, is estimated at 496,000 and the revaluation surplus of this building amounts to 9,000. Record the impairment loss entry.
- Revalued carrying amount of the hotel (fair value at the reporting date)
- 520,000
- Costs of disposal
- 31,000
- Recoverable amount (value in use)
- 496,000
- Revaluation surplus of the hotel
- 9,000