A client of yours Sandfield Ltd (a television manufacturer), has come to you for advice on a number of financial reporting issues of which they are unsure about the financial reporting treatment for the year ended 31 August 2022. You have received the following email.

Borrowing Costs incurred on building new factory

On 31 May 2022 we completed construction of a new warehouse (useful economic life of 50 years) at a total cost of 8,000,000 (3,000,000 of which related to land). At the start of the year, we had general borrowings made up of 2 loans: one of 10,000,000 at an interest rate of 5% and another of 22,000,000 at an interest rate of 4%. All these finance costs have been expensed to the P&L accordingly. The land for development was bought for 3,000,000 on 1 September 2021, but it wasnt until 1 October 2021 we commissioned an architect to draw up plans and solicitor to obtain planning permission.

Discuss and advise the directors of Ground the financial treatment of the above items for in the financial statements for the year ended 31 August 2022.