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oblem 22.1 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 neot receive any reasonable offers to purchase the hotel and, in response, n the price reduced 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 the 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 In 2007, Tony Investment Prop at a cost of $10 million. It has not determined the usage of the property but consider that the value of the property will increase. However, due to the sub-prime loan crisis in the United States and worldwide, the fair value of the property decreases to $7.5 million on 31 March 2008. Tony Ton, the chairman of the group, proposes to use the cost model to avoid any fair value recognised in profit or loss. erty Group purchased a freehold property ll CO Evaluate and discuss the proposed accounting treatment of Tony Ton

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