3 What costs are likely to have been included in the net cash closure cost of £1.3m?

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.