(a) Prepare T;s income statement for the year ended 31 December 20X1 and its balance sheet

(a) Prepare T’s income statement for the year ended 31 December 20X1 and its balance sheet at that date. These should be in a form suitable for publication. Do not prepare notes to the accounts except for those required in part

 ( b). Do not prepare a statement of accounting policies or a statement of changes in equity. (b) Prepare the following notes to T’s accounts:

(i) Intangible non-current assets

(ii) Tangible non-current assets

(a) Explain how each of the following items should be treated in T’s financial statements: Research and development

(i) New calibrating equipment purchased for laboratory (3 marks)

(ii) Long-range radar project (4 marks)

(iii) Wide-angle microwave project (4 marks)

(b) Explain how the costs associated with the trade fair should be treated in T’s financial statements. (4 marks)

(c) The directors of T have read that the calculation of an entity’s profit figure involves a great deal of subjective judgment and that some entities increase or decrease their profits by biasing the subjective decisions which are associated with accounting. Explain how T’s chief accountant should respond if the directors ask for the financial statements to be restated in a manner which makes the entity appear to be more profitable than it actually is.