Avoidable Interest = 934,720

Wildhorse Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $11,500,000 on January 1,2025 . Wildhorse expected to complete the building by December 31,2025. Wildhorse has the following debt obligations outstanding during the construction period. Construction loan-12\% interest, payable semiannually, issued December 31,2024 $4,600,000 Short-term loan-10\% interest, payable monthly, and principal payable at maturity on May 30,20263,450,000 Long-term loan-11\% interest, payable on January 1 of each year; principal payable on January 1,20292,300,000 (a) Assume that Wildhorse completed the office and warehouse building on December 31, 2025, as planned, at a total cost of $11,960,000, and the weighted-average amount of accumulated expenditures was $8,280,000. 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 $ (b) Compute the depreciation expense for the year ended December 31, 2026. Wildhorse 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 $690,000. (Round answer to 0 decimal places, e.g. 5,275.)