Kimbro Concrete Companies is disposing of its blacktop segment this year and is reporting it as a discontinued operation on the statement of net income in the current year. The ratio of consolidated debt to equity is uniform for all operations of the company. What is the minimum amount of interest that Kimbro Concrete can allocate to its discontinued operations? What is the maximum amount of interest that it can allocate to discontinued operations? Provide explanations of your calculations, including references to the codification.

The following information is available related to the net assets and debt of Kimbro Concrete. Interest expense for all debt is 7% of the principal balance.

Net Assets of Kimbro Concrete Net Assets of Blacktop Segment Debt of Kimbro Concrete: Directly attributable to continuing operations Required to be repaid upon disposal of the blacktop segment All other debt $10,500,000 TOTAL $ 1,200,000 Principal $ 500,000 Debt that will be assumed by the buyer of the blacktop segment 150,000 100,000 1,250,000 Interest $ 35,000 7,000 10,500 87,500 $ 2,000,000 $140,000