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Omicron Ltd
Date: 30 September 2023
Details:
- Raw materials inventory (chemical):
- Cost: £40,000
- Replacement cost: £38,000
- Finished goods inventory:
Product | Gamma | Delta |
Direct costs | £80,000 | £60,000 |
Proportion of fixed overhead | £20,000 | £15,000 |
Proportion of selling costs | £5,000 | £4,000 |
Net realizable value | £120,000 | £85,000 |
- Office machinery:
Acquired on 1 October 2017 for £280,000, depreciated over 7 years using the reducing balance method. - Freehold property:
Acquired 22 years ago for £1,200,000, land value estimated at £300,000. Buildings are depreciated over 55 years. - Research and development:
- Research costs: £70,000
- Development costs: £90,000, benefiting over 4 years.
Required:
Determine the appropriate accounting treatment for these items in the financial statements of Omicron Ltd as of 30 September 2023.
Answer & Explanation
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