Question 3:

Assume a company borrowed $200,000 at 10% interest from State Bank on Jan. 1, 2015, for specific purposes of constructing special-purpose equipment to be used in its operations. Construction on the equipment began on Jan. 1, 2015, and the following expenditures were made prior to the projects completion on Dec. 31, 2015:

Cost of Direct material and labor $300,000

Overhead cost $100,000

Required: compute the cost of the asset.