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Delta Ltd
Date: 30 September 2023
Details:
- Raw materials inventory (glass):
- Cost: £37,000
- Replacement cost: £35,000
- Finished goods inventory:
Product | Lambda | Mu |
Direct costs | £65,000 | £55,000 |
Proportion of fixed overhead | £18,000 | £15,000 |
Proportion of selling costs | £4,000 | £3,500 |
Net realizable value | £100,000 | £85,000 |
- Office equipment:
Acquired on 1 October 2018 for £280,000, depreciated over 9 years using the reducing balance method. - Freehold property:
Acquired 17 years ago for £2,700,000, land value estimated at £700,000. Buildings are depreciated over 55 years. - Research and development:
- Research costs: £390,000
- Development costs: £630,000, benefiting over 5 years.
Required:
Discuss how these items should be accounted for in Delta Ltd's financial statements for the period ending 30 September 2023.
Answer & Explanation
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