On January 3, 2016, Michelson & Sons acquired a tract of land just outside the city limits. The land and existing building were purchased for $2.4 million. Michelson paid $400 000 and signed a noninterest-bearing note requinn he company to pay the remain ng S2 000.000 on December 31, 2017 An m terest rate of 7% properly reflects the time value of money for this type of loan agreement. Transfer taxes, title insurance, and other costs totaling S24,000 were paid at closing During February, the old building was demolished at a cost of S120,000, and an additional S100,000 was paid to clear and grade the land. Construction of a new building began on March 1 and was completed on October 30. Construction expenditures were as follows: S 800,00 $1,200,0 $1,200,0 September 1 $600,0 June 30 Michelson did not borrow specifically for the construction project, but did have the following debt outstanding throughout 2016 $6,000,000, 8% long-term note payable 2.000.000, 5% long-term note payable . . In December, the company purchased equipment and office furniture and fixtures for a lump-sum price of S800,000. The fair values of the equipment and the furniture and fixtures were S540,000 and S360,000, respectively. In December, Michelson paid S340,000 for the construction of parking lots and landscaping Required 1. Determine the initial values of the various assets that Michelson acquired or constructed during 2016 2. How much interest expense will Michelson report in its 2016 income statement