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Gamma Ltd
Date: 31 August 2023
Details:
- Raw materials inventory (metal):
- Cost: £55,000
- Replacement cost: £53,000
- Finished goods inventory:
Product | Rho | Sigma |
Direct costs | £70,000 | £55,000 |
Proportion of fixed overhead | £18,000 | £15,000 |
Proportion of selling costs | £4,000 | £3,500 |
Net realizable value | £105,000 | £85,000 |
- Office equipment:
Acquired on 1 September 2020 for £180,000, depreciated over 7 years using the reducing balance method. - Freehold property:
Acquired 18 years ago for £2,700,000, land value estimated at £650,000. Buildings are depreciated over 55 years. - Research and development:
- Research costs: £140,000
- Development costs: £180,000, benefiting over 6 years.
Required:
Analyze how these items will be reflected in Gamma Ltd's balance sheet and income statement for the year ending 31 August 2023.
Answer & Explanation
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