Capitalization of Interest Buffalo Bills Brothers (BBB) started construction of a new headquarters building for its own use at an estimated cost of $5,000,000 on January 1, 2017. BBB expected to complete the building by December 31, 2017. BBB has the following debt obligations outstanding during the construction period. Construction loan12% interest, payable semiannually, issued December 31, 2016 $2,000,000 Short-term loan10% interest, payable monthly, and principal payable at maturity on May 30, 2018 1,400,000 Long-term loan11% interest, payable on January 1 of each year. Principal payable on January 1, 2021 1,000,000 Instructions (Carry all computations to two decimal places.) (a) Assume that BBB completed the headquarters building on December 31, 2017, as planned at a total cost of $5,200,000, and the weighted-average amount of accumulated expenditures was $3,600,000. Compute the avoidable interest on this project. (b) Compute the depreciation expense for the year ended December 31, 2018. BBB 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 $300,000.