How much of this expenditure will be regarded as an expense in the income statement (profit and loss account)?

(a) £100,000

(b) £400,000

(c) £500,000

(d) £900,000 

The following information applies to question.

A major electronics company has acquired a green field site to build a new factory. The land costs £1.5 million, together with professional fees of £100,000. The site requires remedial work costing £500,000 on old mine shafts before any building can commence. The company plans a massive advertising drive to promote the factory and to recruit skilled personnel. An initial package of £400,000 has been agreed with their advertising agents for this purpose.