You are the Chief Accountant of a retailing company which Operates from a number of department stores throughout the country. You are approached early in 20X1 by a member of your staff who is preparing the annual accounts for the Barnsley store for the year ended 31 December 20X0. He seeks your advice on the following matters:

(a) how to treat the goodwill arising on the acquisition of a local bakery during 20X0. The Barnsley store acquired the bakery for the purpose of securing its own supply of bread. The cost was £85,000 including goodwill of £20,000;

(b) whether to depreciate the cost of the freehold of the furniture department's warehouse which was purchased during the year. The cost was £44,000 split between land £10,000 and buildings £34,000. Legal fees of £800 were incurred;

(c) how to value two items of stock about which he is unsure. These are: (i) a large stock of over-ordered Christmas cards costing £780; (ii) a stock of skateboards purchased in 19X9 for £1,000;

(d) whether to treat an advertising campaign as an expense in 20X0 or to carry it forward to 20X1. The campaign costing £1,700 involved a series of advertisements in the Barnsley Sun newspaper in December 20X0 informing readers of the January sale. The sale was not as popular as it has been in recent years.

Required:

Draft a memorandum to your staff setting out the accounting principles to be followed in each of the above cases and give advice on the most appropriate treatment in the circum- stances given.