What is the cost of the land in the company’s statement of financial position (balance sheet)?

(a) £1.5m

(b) £1.6m

(c) £2.0m

(d) £2.1m

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.