Ivanhoe A$..$ is a book distributor that had been operating in its original facility since $1985.$ The increase in certification programs and

continuing education requirements in several professions has contributed to an annual growth rate of $15\%$ for Ivanhoe since $2017.$

Ivanhoe' original facility became obsolete by early $2022$ because of the increased sales volume and the fact that Ivanhoe now carries

CDs in addition to books.

On June $1,2022,$ Ivanhoe contracted with Black Construction to have a new building constructed for $4,320,000$ on land owned by

Ivanhoe. The payments made by Ivanhoe to Black Construction are shown in the schedule below.

Construction was completed, and the building was ready for occupancy on May $27,2023.$ Ivanhoe had no new borrowings directly

associated with the new building but had the following debt outstanding at May $31,2023,$ the end of its fiscal year.

$10\%,5-$year note payable of $22,160,000,$ dated April $1,2019,$ with interest payable annually on April $1.$

$14\%,10-$year bond issue of $$3,240,000$ sold at par on June $30,2015,$ with interest payable annually on June $30.$

The new building qualifies for capitalization of borrowing costs. The effect of capitalizing the interest on the new building, compared

with the effect of expensing the interest, is material.

$($a$)$

Your answer is incorrect.

Compute the average carrying amount on Ivanhoe's new building during the capitalization period.

Average carrying amount $,t$