During 1984, a manufacturer of garden requisites spent £40,000 on research and development. Investigation of this sum yielded the following information:

(i) £20,000 had been spent in developing a new plastic moulding process for garden gnomes. It was intended that this new process would come into operation in 1985.

(ii) £12,000 had been spent in trying, without success, to improve the durability of garden hoses, although the research leader was sure that he was 'on the verge of a breakthrough which would revolutionize hose making'.

(iii) £8,000 represented the normal costs of office provision, etc.

Required:

Explain how you would treat each of the above items in the accounts for the year ended 31 December 1984.