Pi Ltd
 Date: 31 December 2023

Details:

• Raw materials inventory (cotton):
  • Cost: £36,000
  • Replacement cost: £34,000
• 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 January 2017 for £330,000, depreciated over 9 years using the reducing balance method.
• Freehold property:
   Acquired 18 years ago for £2,800,000, land value estimated at £750,000. Buildings are depreciated over 55 years.
• Research and development:
  • Research costs: £750,000
  • Development costs: £1,350,000, benefiting over 5 years.

Required:
 Explain the accounting treatment for these items in Pi Ltd's financial statements for the period ending 31 December 2023.