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Upsilon Ltd
Date: 30 June 2024
Details:
- Raw materials inventory (cotton):
- Cost: £34,000
- Replacement cost: £32,000
- Finished goods inventory:
Product | Theta | Iota |
Direct costs | £70,000 | £60,000 |
Proportion of fixed overhead | £18,000 | £16,000 |
Proportion of selling costs | £5,500 | £5,000 |
Net realizable value | £110,000 | £90,000 |
- Machinery:
Acquired on 1 July 2017 for £340,000, depreciated over 10 years using the reducing balance method. - Freehold property:
Acquired 18 years ago for £3,200,000, land value estimated at £750,000. Buildings are depreciated over 60 years. - Research and development:
- Research costs: £790,000
- Development costs: £1,430,000, benefiting over 5 years.
Required:
Discuss the accounting treatment for these items in Upsilon Ltd's financial statements for the period ending 30 June 2024.
Answer & Explanation
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