Harrisburg Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $5,017,700 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.
| Construction loan-12% interest, payable semiannually, issued December 31, 2013 |
|
$2,013,200 |
| Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2015 |
|
1,612,800 |
| Long-term loan-11% interest, payable on January 1 of each year; principal payable on January 1, 2018 |
|
1,016,200
|
Assume that Harrisburg completed the office and warehouse building on December 31, 2014, as planned at a total cost of $5,217,300, and the weighted average amount of accumulated expenditures was $3,816,000. Compute the avoidable interest on this project.
Avoidable Interest:????
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 $300,300.
Depreciation Expense????