On January 3, 2024, 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 requiring the company to pay the remaining $2,000,000 on December 31,2025 . An interest rate of 7% properly reflects the time value of money for this type of loan agreement. Transfer taxes, title insurance, and other costs totaling $24,000 were paid at closing. At the end of February, the old building was demolished at a cost of $120,000, and an additional $100,000 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: Michelson did not borrow specifically for the construction project, but did have the following debt outstanding throughout 2024 : $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 $800,000. The fair values of the equipment and the furniture and fixtures were $540,000 and $360,000, respectively. In December, Michelson paid $340,000 for the construction of parking lots and landscaping. Note: Use appropriate factor(s) from the tables provided. Round other intermediate calculations to the nearest whole dollar. Enter your answers in whole dollars. (FV of $1,PV of $1, FVA of $1,PVA of $1,FVAD of $1 and PVAD of $1 ) Required: 1. Determine the initial values of the various assets that Michelson acquired or constructed during 2024. 2. How much interest expense will Michelson report in its 2024 income statement