Berrill Ltd is a mining firm incorporated on 1 July 2012 to engage in the exploration of iron ore in southern New South Wales.On 30 June 2013 the records show that the entity had incurred the following exploration and evaluation costs for area of interest A and area of interest B.

\begin{array} { | l | l | l | } \hline & \text { Area of interest } \mathrm { A } & \text { Area of interest B } \\\hline \text { Acquisition costs - mining tenements } & \$ 100000 & \$ 200000 \\\hline \text { Exploration costs } & 300000 & 200000 \\\hline \text { Evaluation costs } & 200000 & 100000 \\\hline \text { Total } & \$ 600000 & \$ 500000 \\\hline\end{array}

On 30 June 2013 area of interest B was evaluated by the board of directors to be not economically feasible and abandoned the site.
What is the effect of the above transactions on the statement of financial position and the statement of comprehensive income of Berrill Ltd using the full-cost method?
A)

\begin{array} { | l | l | } \hline \text { Statement of financial position } & \text { Statement of comprehensive income } \\\hline \text { Increase asset by } \$ 1.1 \text { million } & \text { No effect } \\\hline\end{array}

\begin{array} { | l | l | } \hline \text { Statement of financial position } & \text { Statement of comprehensive income } \\\hline \text { Increase asset by } \$ 0.6 \text { million } & \text { Increase expense by } \$ 0.5 \text { million } \\\hline\end{array}

\begin{array} { | l | l | } \hline \text { Statement of financial position } & \text { Statement of comprehensive income } \\\hline \text { Increase asset by } \$ 0.5 \text { million } & \text { Increase expense by } \$ 0.6 \text { million } \\\hline\end{array}

\begin{array} { | l | l | } \hline \text { Statement of financial position } & \text { Statement of comprehensive income } \\\hline \text { Increase asset by } \$ 0.5 \text { million } & \text { No effect } \\\hline\end{array}

The Possible Methods for Accounting for Pre-Production Costs in the Extractive

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