BlueFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $ 7,000,000 on January 1, 2020. Blue expected to complete the building by December 31, 2020. Blue has the following debt obligations outstanding during the construction period.Construction loan- 12% interest, payable semiannually, issued December 31, 2019 $ 2,800,000Short-term loan- 10% interest, payable monthly, and principal payable at maturity on May 30, 2021 2,100,000Long-term loan- 11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 1,400,000 Compute the depreciation expense for the year ended December 31, 2021. Blue 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 $ 420,000. (Round answer to O decimalplaces, e.g. 5,275.)Depreciation Expense$ Assume that Blue completed the office and warehouse building on December 31, 2020, as planned at a total cost of $ 7,280,000,and the weighted-average amount of accumulated expenditures was $ 5,040,000. 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$568960%24

Depreciation is the amount of expense which is recorded to report the regular wear and tear in the…

Answered: BlueFurniture Company started…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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BlueFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $ 7,000,000 on January 1, 2020. Blue expected to complete the building by December 31, 2020. Blue has the following debt obligations outstanding during the construction period.

Construction loan- 12% interest, payable semiannually, issued December 31, 2019		$ 2,800,000
Short-term loan- 10% interest, payable monthly, and principal payable at maturity on May 30, 2021		2,100,000
Long-term loan- 11% interest, payable on January 1 of each year. Principal payable on January 1, 2024		1,400,000

Compute the depreciation expense for the year ended December 31, 2021. Blue 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 $ 420,000. (Round answer to O decimal
places, e.g. 5,275.)
Depreciation Expense
$

Assume that Blue completed the office and warehouse building on December 31, 2020, as planned at a total cost of $ 7,280,000,
and the weighted-average amount of accumulated expenditures was $ 5,040,000. 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
$
568960
%24

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