Green Change is preparing its financial statements for the year ended 28 March 20X7. On 24 March 20X7, at their meeting, the board of directors approved a detailed plan which involved selling a building owned by the company. The building was purchased for £1.85 million 20 years ago. All buildings are depreciated at a rate of 2 per cent straight line. Immediately after the meeting, the board announced the sale and contacted a sales agent. The agent has advised that the building should sell within 12 months for an estimated price of £1 million, before deducting sales agent commission of 5 per cent on the gross sale price.

Required:

(i) Explain how the above information should be treated in the financial statements of Green Change for the years ended 31 March 20X7

(ii) Explain what will happen in the year ended 31 March 20X8 if the expected sale price is revised to £1.3 million on 30 September 20X7.