Riders Corporation manufactures bicycles. To meet the increased demand for its bicycles recently it acquired land and equipment and entered into a contract with a construction company to construct a new factory. Below are the details of expenses Riders incurred in 2016 in acquiring land and equipment and with regard to construction of factory. $850,000 35,000 110,000 10,000 12,500 1,850,000 575,000 24,000 30,000 4,000 9,000 5,000 18,000 Purchase price of the land Demolition and removal of old building Clearing and grading the land before construction Various closing costs in connection with acquiring the land Architect's fee Payments to contractor for building construction Equipment purchased Freight charges on equipment Trees, plants and other landscaping Installation of a sprinkler system for the landscaping Cost to build special platforms and install wiring for the equipment Cost of trial runs to ensure proper installation of the Equipment Fire and theft insurance on the factory for the first vear of use Construction of building started on March 2016 and completed on December 2017. Riders Corporation had only one interest bearing long-term debt with a book value of $7,500,000 and an effective interest rate of 6%. Payment of $1,850,000 to contractor is made in several installments as shown below. March 1, 2016 July 31,2016 September 30, 2016 November 30, 2016 December 31, 2016 $400,000 450,000 350,000 450,000 200,000