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Omega Inc.
Date: 31 October 2023
Details:
- Raw materials inventory (rubber):
- Cost: £28,000
- Replacement cost: £26,000
- Finished goods inventory:
Product | Gamma | Delta |
Direct costs | £65,000 | £55,000 |
Proportion of fixed overhead | £18,000 | £16,000 |
Proportion of selling costs | £5,500 | £5,000 |
Net realizable value | £105,000 | £85,000 |
- Office machinery:
Acquired on 1 November 2018 for £300,000, depreciated over 9 years using the reducing balance method. - Freehold property:
Acquired 16 years ago for £2,800,000, land value estimated at £700,000. Buildings are depreciated over 60 years. - Research and development:
- Research costs: £590,000
- Development costs: £1,030,000, benefiting over 6 years.
Required:
Explain how these items should be reflected in Omega Inc.'s financial statements for the period ending 31 October 2023.
Answer & Explanation
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