Bpp Q Sunshine (sep/dec17)

1. This is assumed knowledge of contract law (F4). A contract is a formal agreement which binds the parties to it, in law. So if one party is in breach, the other party will be able to seek legal remedies. A contract is not binding (ie legally enforceable) until it is signed by the parties. A draft contract (unsigned) is clearly not binding. 2. The building is only ONE of many. Since revaluation model must be applied to a class of assets, RoMM is that all the remaining buildings are understated if their revaluations are similarly out of date. .

It is assumed knowledge of FA(F3)/FR(F7) and SBR(P2) that to use the revaluation model of IAS 16 is not a "one-off" exercise. This is what IAS 16 states about the frequency of valuations: "The frequency of revaluations depends upon the changes in fair values of the items of property, plant and equipment being revalued. When the fair value of a revalued asset differs materially from its carrying amount, a further revaluation is required. Some items of property, plant and equipment experience significant and volatile changes in fair value, thus necessitating annual revaluation. Such frequent revaluations are unnecessary for items of property, plant and equipment with only insignificant changes in fair value. Instead, it may be necessary to revalue the item only every three or five years." So three years is one indicator that revaluations could be out-of-date - but it is the significantly different selling price (a fair value) that indicates that revaluations are out of date.

Correct - and similarly if it was a loss, it should not be a material loss.