Construction of Building:A building was constructed on land purchased last year at a cost of $150,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows.

Date Payment

2/1 $120,000

6/1 360,000

9/1 480,000

11/1 100,000

To finance construction of the building, a $600,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $200,000 of other outstanding debt during the year at a borrowing rate of 8%.

Instructions

Record the acquisitionof the asset