P10-5. (Classification of Costs and Interest Capitalization) (LO on January 1, 2017, Blair Corporation purchased for S500,000 a tract of land (site number 101) with a building. Blair paid a real estate broker's commission of S36,000, legal fees of S6,000, and title guarantee insurance of S18,000. The closing statement indicated that the land value was $500,000 and the building value was $100,000. Shortly after acquisition, the building was razed at a cost of $54,000. Blair entered into a S3,000,000 fixed-price contract with Slatkin Builders, Inc. on March 1,2017, forthe construction of an office building on land site number 101. The building was completed and occupied on September 30, 2018. Additional construction costs were incurred as follows. $21,000 Plans, specifications, and blueprints Architects' fees for design and supervision 82,000 The building is estimated to have a 40-year life from date of completion and will be depreciated using the 150% declining-balance method. To finance construction costs, Blair borrowed S3,000,000 on March 1, 2017. The loan is payable in 10 annual installments of $300,000 starting on March 1, 2018, plus interest at the rate of 10%. Blairs weighted-average amounts of accumulated building construction expenditures were as follows For the period March 1 to December 31, 2017 $1,300,000 For the period January 1 to September 30, 2018 1,900,000