If an entity constructs a machine or a building with its own personnel, all costs incurred in construction are included in the asset amount.

Madrona Company built a new building for its own use. It spent

$800,000 in materials, $2,850,000 in salaries to workers directly engaged in the building’s construction, $1,250,000 to purchase services, and

$750,000 in overhead costs related to the building. This building should be recorded in the accounts at its cost, $ .