On January 1, 2021, the Blackstone Corporation purchased a tract
of land (site number 11) with a building for $690,000.
Additionally, Blackstone paid a real estate broker's commission of
$45,000, legal fees of $5,500, and title insurance of $22,500. The
closing statement indicated that the land value was $545,000 and
the building value was $145,000. Shortly after acquisition, the
building was razed at a cost of $84,000.
Blackstone entered into a $3,900,000 fixed-price contract with
Barnett Builders, Inc., on March 1, 2021, for the construction of
an office building on land site 11. The building was completed and
occupied on September 30, 2022. Additional construction costs were
incurred as follows:
Plans, specifications, and blueprints | $ | 21,000 | |
Architects' fees for design and supervision | 93,000 | ||
To finance the construction cost, Blackstone borrowed $3,900,000 on
March 1, 2021. The loan is payable in 10 annual installments of
$390,000 plus interest at the rate of 12%. Blackstone's average
amounts of accumulated building construction expenditures were as
follows:
For the period March 1 to December 31, 2021 | $ | 990,000 | |
For the period January 1 to September 30, 2022 | 2,750,000 | ||
Required:
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