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Omega Ltd
Date: 30 June 2024
Details:
- Raw materials inventory (aluminium):
- Cost: £35,000
- Replacement cost: £33,000
- Finished goods inventory:
Product | Theta | Lambda |
Direct costs | £65,000 | £50,000 |
Proportion of fixed overhead | £18,000 | £15,000 |
Proportion of selling costs | £5,500 | £5,000 |
Net realizable value | £100,000 | £80,000 |
- Office machinery:
Acquired on 1 July 2018 for £280,000, depreciated over 8 years using the reducing balance method. - Freehold property:
Acquired 15 years ago for £2,700,000, land value estimated at £700,000. Buildings are depreciated over 60 years. - Research and development:
- Research costs: £350,000
- Development costs: £550,000, benefiting over 6 years.
Required:
Discuss how these items should be accounted for in Omega Ltd's financial statements for the year ending 30 June 2024.
Answer & Explanation
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