Problem 3 (35 points) January 1, Year 1, Cougar Corporation exchanged machinery for a six-acre tract of land with Ellis Corporation. The machinery has a net bock value or se million and fair value of $2.2 million. Cougar also wrote a $500,000 non-interest bearing one year note payable on December 31, Year 1, to Ellis Corporation to make the transaction go through. Assume the exchange has commercial substance. Also assume similar loans bear a 12% interest. (For one year, FV of $1 at 12% = 1.12; PV of 1 at 12% = 0.89286) Cougar Co. built a warehouse on this tract of land during Years 2 and 3. The following payments were made during construction for building materials, labor, and overhead: February 1, Year 3 50.000 . January 1, Year 2 April 1. Year 2 October 1, Year 2 $130,000 $240,000 $200,000 $350,000 130,00 90,000 In addition, Cougar: Borrowed $300,000 at 12% on January 1, Year 2, under a construction note, to finance this warehouse Had bonds outstanding of $1,000,000 at 10% on January 1, Year 2: Interest is payable annually on December 31 Had notes payable outstanding of $3,000,000 at 7% on January 1, Year 2; interest is payable annually on December 31 Completed construction on the building, which was ready for immediate use on March 1, Year 3 Required: 1. Please record all Journal entries related to the exchange in Year 1. Assume Cougar paid the notes on time. 2. Please calculate the warehouse cost, including the capitalized interest based on specific interest method. 3. Assume Cougar depreciate the warehouse using 150% declining balance method and the estimated useful life for this warehouse is 20 year. Please record the depreciation for this warehouse for Year 3