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Nu Corporation
Date: 31 January 2024
Details:
- Raw material inventory (synthetics):
- Cost: £35,000
- Replacement cost: £33,000
- Finished goods inventory:
Product | Theta | Iota |
Direct costs | £70,000 | £55,000 |
Proportion of fixed overhead | £20,000 | £18,000 |
Proportion of selling costs | £5,500 | £5,000 |
Net realizable value | £110,000 | £85,000 |
- Equipment:
Acquired on 1 February 2018 for £320,000, depreciated over 10 years using the straight-line method. - Buildings:
Acquired 15 years ago for £2,600,000, land value estimated at £650,000. Buildings are depreciated over 55 years. - Research and development:
- Research costs: £720,000
- Development costs: £1,290,000, benefiting over 5 years.
Required: Explain the accounting treatment for these items in Nu Corporation's financial statements for the period ending 31 January 2024.
Answer & Explanation
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