Clay Company started construction on a new office building on January 1, 20X1, and it moved into the finished building on July 1, 20X2. Of the building’s $2,500,000 total cost, $2,000,000 was incurred in 20X1 evenly throughout the year. Clay’s incremental borrowing rate was 12% throughout 20X1, and the total amount of interest incurred by Clay during 20X1 was $102,000. 

Required:

What amount should Clay report as capitalized interest at December 31, 20X1?