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One of the directors on the board of directors of Manly Ltd has proposed that the company adopt the revaluation model for the measurement of its machinery. Some of this machinery is difficult to replace because of its unique nature and certain items of machinery have increased in value in the current period. The director is arguing that, as there has been no decline in the machinery's fair value, no depreciation expense should be recognized on these items of machinery.
Required:
Explain whether the director's proposal (about not recognizing depreciation) should be adopted by the board.
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