Question

# Vaughn Furniture Company started construction of a combination office and warehouse building for its own use...

Vaughn Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of \$4,975,000 on January 1, 2017. Vaughn expected to complete the building by December 31, 2017. Vaughn has the following debt obligations outstanding during the construction period. Construction loan-10% interest, payable semiannually, issued December 31, 2016 \$2,015,500 Short-term loan-8% interest, payable monthly, and principal payable at maturity on May 30, 2018 1,597,400 Long-term loan-9% interest, payable on January 1 of each year. Principal payable on January 1, 2021 1,003,600 Assume that Vaughn completed the office and warehouse building on December 31, 2017, as planned at a total cost of \$5,212,000, and the weighted-average amount of accumulated expenditures was \$3,828,400. 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 \$ Compute the depreciation expense for the year ended December 31, 2018. Vaughn 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 \$302,300. (Round answer to 0 decimal places, e.g. 5,275.) Depreciation Expense \$

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