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Psi Ltd
Date: 31 December 2023
Details:
- Raw materials inventory (leather):
- Cost: £28,000
- Replacement cost: £30,000
- Finished goods inventory:
Product | Sigma | Tau |
Direct costs | £55,000 | £45,000 |
Proportion of fixed overhead | £10,000 | £8,000 |
Proportion of selling costs | £2,500 | £2,000 |
Net realizable value | £80,000 | £60,000 |
- Office machinery:
Acquired on 1 January 2016 for £250,000, depreciated over 10 years using the reducing balance method. - Freehold property:
Acquired 20 years ago for £1,800,000, land value estimated at £450,000. Buildings are depreciated over 55 years. - Research and development:
- Research costs: £110,000
- Development costs: £140,000, benefiting over 4 years.
Required:
Determine the appropriate accounting treatment for these items in Psi Ltd's financial statements as of 31 December 2023.
Answer & Explanation
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