1 Is it appropriate to include asset write-off in the cost of closing the factory? This short...

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1 Is it appropriate to include asset write-off in the cost of closing the factory?

This short article reflects what must have been a classic decision-making situation: the cost of closing a factory against the cost of keeping it open. Although the total cost of closure is put at £2.8m, £1.5m of it reflects ‘asset write-offs’ (this information was given in a press release issued by the company). As a result, there is a £1.3m effect on cash flow but this is expected to be offset by selling the factory for a book value of £1.5m. The management obviously sees no long-term future for the Chesterfield factory because it appears that it is going to be closed permanently.

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