Construction of Building: A building was constructed on land purchased last year at a cost of $150,000

Construction of Building: A building was constructed on land purchased last year at a cost of $150,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows.

Date  Payment

2/1  $120,000

6/1  360,000

9/1  480,000

11/1  100,000

To finance construction of the building, a $600,000, 12% construction loan was taken out on ­February 1. The loan was repaid on November 1. The firm had $200,000 of other outstanding debt during the year at a borrowing rate of 8%.

Instructions

Record the acquisition of the asset