Discuss how the events should be accounted

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On 1 September 2014, Preston Sdn. Bhd., (Preston) had opened a tuition centre at a cost of RM10 million. The estimated useful life of the tuition centre was 25 years. On 31 August 2020, the tuition centre was closed down because the number of students using the tuition centre had declined unexpectedly due to the Covid 19 pandemic. The tuition centre is to be converted for use as a museum, and there is no expectation that the building will reopen as a tuition centre.

The current replacement cost for a museum of equivalent size to the tuition centre is RM4.2 million. Because of the nature of the non-current assets, value-in-use and net selling price are unrealistic estimates of the value of the tuition centre. The change in use would have no effect on the estimated life of the building.

Problem 1: Discuss how the events should be accounted for in the financial statements of Preston Sdn. Bhd.

Reference no: EM132663494

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