Discuss the classification of the hotel

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Reference no: EM131481922

Committed to a plan to sell its hotel in the United Kingdom and planning to buy a new one in Italy, BB Inc. Classified the hotel as held for sale at year-end of 2005.

a) During 2006, the market conditions that existed in 2005, when the hotel was classified initially as held for sale, deteriorated, and as a result, the hotel was not sold by the end of 2006. During 2006, BB actively solicited but did not receive any reasonable offers to purchase the hotel, and in response, reduced the price.

b) During the following year, 2007, market conditions deteriorated further, and the hotel was not sold by 2007. BB believes that the market conditions will improve and has not further reduced the price of hotel. The hotel continues to be held for sale, but at a price in excess of its current fair value.

Discuss the classification of the hotel at the end of 2006 and 2007.

Reference no: EM131481922

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