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Iota Ltd Date: 31 July 2023Details:Raw materials inventory (ceramics):Cost: £30,000Replacement cost: £28,000Finished goods inventory:ProductRhoSigmaDirect costs£55,000£45,000Proportion of...

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Question

Accounting

Iota Ltd
 Date: 31 July 2023

Details:

  • Raw materials inventory (ceramics):
    • Cost: £30,000
    • Replacement cost: £28,000
  • Finished goods inventory:

Product

Rho

Sigma

Direct costs

£55,000

£45,000

Proportion of fixed overhead

£12,000

£11,000

Proportion of selling costs

£3,000

£2,500

Net realizable value

£80,000

£60,000

  • Office machinery:
     Acquired on 1 August 2018 for £200,000, depreciated over 8 years using the reducing balance method.
  • Freehold property:
     Acquired 18 years ago for £1,500,000, land value estimated at £350,000. Buildings are depreciated over 40 years.
  • Research and development:
    • Research costs: £40,000
    • Development costs: £50,000, benefiting over 6 years.

Required:
 Analyze how these items will affect the financial statements of Iota Ltd as of 31 July 2023.

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