Infinite Leisure Group owns and operates a number of pubs and clubs across Europe and South East Asia. Since inception the group has made exclusive use of the cost model for the purpose of its annual financial reporting. This has led to a number of shareholders expressing concern about what they see as a consequent lack of clarity and quality in the group's financial statements.
The CEO does not support use of the alter native to the cost model (the revaluation model), believing it produces volatile information. However, she is open to persuasion and so, as an example of the impact of a revaluation policy, has asked you to carry out an analysis (using data concerning 'Sooz' - one of the group's nightclubs sold during the year to 31 October 2006) to show the impact the revaluation model would have had on the group's financial statements had the model been adopted from the day the club was acquired.
The following extract has been taken from the company€™s asset register:

Updates
1 November 2003 Replacement cost of plant & equipment ‚¬0.42m. No fair value available (mainly specialized audio visual equipment). No change to economic life. Property revaluation ‚¬13m (land ‚¬4m, buildings ‚¬9m). Future economic life as at 1 November 2003 50 years


Disposal
Date committed to a plan to sell... January 2006
Date sold ............. June 2006
Net sale price ............ ‚¬9.1m
Sale price components
Plant and equipment .......... ‚¬0.1m
Property .............. ‚¬9.0m
Note: the Group accounts for property and plant and equipment as separate non-current assets in its statement of financial position using straightline depreciation.

Required
Prepare an analysis to show the impact on Infinite Leisure€™s financial statements for each year the €˜Sooz€™ nightclub was owned had the revaluation model been in place from the day the nightclub wasacquired.

Transcribed Image Text:

Outlet 'Soo Acquisition data Date acquired Total cost Cost components: I November 2001 10.24m Plant and equipment Cost Economic life Residual value 0.24m six years nil Property Buildings Cost Economic life 7.0m 50 years Land Cost 3.0m