Chick-fil-A self-constructs a distribution center using $1.3 million of materials, $0.4 million of labor, and $0.3 million of overhead. The distribution center has a fair value of $1.9 million. At what amount should Chick-fil-A report the distribution center on its balance sheet?

a. $1.7 million
b. $1.9 million
c. $1.3 million
d. $2.0 million

b. $1.9 million
[Report at full cost to construct ($2 million), but not higher than fair value ($1.9 million). Therefore, $0.1 million should be reported as a loss of the period.]