Response to the following questions:
1. Tensile Company solicited bids from several contractors to construct an addition to its office building. The lowest bid received was for $340,000. Tensile Company decided to construct the addition itself at a cost of $325,000. What amount should be recorded in the building account?
2. Are the amounts at which fixed assets are reported in the balance sheet their approximate market values as of the balance sheet date? Discuss.
3. How would you evaluate the effective use of fixed assets?