Harrisburg Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $5,015,100 on January 1, 2014. Harrisburg expected to complete the building by December 31, 2014. Harrisburg has the following debt obligations outstanding during the construction period.
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Construction loan-12% interest, payable semiannually, issued December 31, 2013
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$2,010,100
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Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2015
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1,620,700
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Long-term loan-11% interest, payable on January 1 of each year; principal payable on January 1, 2018
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1,024,400
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A. Assume that Harrisburg completed the office and warehouse building on December 31, 2014, as planned at a total cost of $5,210,600, and the weighted average amount of accumulated expenditures was $3,810,300. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)
Avoidable Interest ?
B. Compute the depreciation expense for the year ended December 31, 2015. Harrisburg elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $310,000. (Round answer to 0 decimal places, e.g. 5,275.)
Depreciation Expense ?