State the definition of the term "work in progress".
State the basis on which work in progress is valued.
Prepare the manufacturing account for watches covering the year ended 31 December 2019.
Calculate the gross profit for the year ended 31 December 2019 on sales of watches and clocks. Present your calculations in the table below.
Prepare an extract from the income statement for the year ended 31 December 2019 that shows the gross profit, the manufacturing profit and the adjustment to the provision for unrealised profit.
Explain how the provision for unrealised profit is treated in the income statement and in the statement of financial position. Support your answer by referring to the accounting concepts.
Advise the directors whether only clocks should be sold in future periods. Justify your answer using your calculations from (c) and (d).