East Company built two similar buildings. Each building took one year to build and required $25,000,000 in construction costs. East had limited internal financial resources, so it could fund only Building A internally and financed Building B by borrowing the $25,000,000 evenly over the year (i.e., zero at the beginning and increasing to $25,000,000 by the end of the year). The interest rate on the loan is 5%. Both projects were finished on December 31, 2018, and were ready for occupancy immediately. The buildings are estimated to have a useful life of 30 years with no residual value. East uses the straight-line method for depreciation. Required Requirement a. How much interest cost can be capitalized on Building B? $ 625,000 Requirement b. What will be the annual depreciation expense for each of the two buildings? (Round the depreciation expense to the nearest whole dollar.)

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budge…