Bed and Breakfast (B&B), an Italian company operating in the Tuscany region, follows IFRS and has made

Question:

Bed and Breakfast (B&B), an Italian company operating in the Tuscany region, follows IFRS and has made the choice to remeasure long-lived assets at fair value. B&B purchased land in 2009 for €150,000. At the end of the next four years, the land is worth €160,000 in 2009, €155,000 in 2010, €140,000 in 2011, and €145,000 in 2012.

Required
a. Describe how B&B will reflect the changes in the land’s value in each of its annual financial statements.
b. Assume that the asset was a building with a ten-year remaining useful life as of the end of 2009. After writing the building upward to €160,000, how much should B&B charge to depreciation expense in 2009?