(ii) The property of the former administrative centre of Tyre is owned by the company. Tyr

(ii) The property of the former administrative centre of 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 2006. 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. Tyres uses the ‘cost model’ in IAS16 ‘Property, plant and equipment’ and has owned the property

for many years. (7 marks)

Required:

Advise the directors of Tyre on how to treat the above items in the financial statements for the year ended

31 May 2006.

(The mark allocation is shown against each of the above items)