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Chi Ltd Date: 31 August 2023Details:Raw materials inventory (leather):Cost: £28,000Replacement cost: £26,000Finished goods inventory:ProductAlphaBetaDirect costs£60,000£50,000Proportion of...

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Question

Accounting

Chi Ltd
 Date: 31 August 2023

Details:

  • Raw materials inventory (leather):
    • Cost: £28,000
    • Replacement cost: £26,000
  • Finished goods inventory:

Product

Alpha

Beta

Direct costs

£60,000

£50,000

Proportion of fixed overhead

£16,000

£14,000

Proportion of selling costs

£4,500

£4,000

Net realizable value

£95,000

£75,000

  • Office machinery:
     Acquired on 1 September 2017 for £280,000, depreciated over 8 years using the reducing balance method.
  • Freehold property:
     Acquired 20 years ago for £2,900,000, land value estimated at £750,000. Buildings are depreciated over 60 years.
  • Research and development:
    • Research costs: £570,000
    • Development costs: £990,000, benefiting over 7 years.

Required:
 Discuss how these items should be presented in Chi Ltd's financial statements for the period ending 31 August 2023.

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