Exercise 10-07 Nash Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $11,000,000 on January 1, 2020. Nash expected to complete the building by December 31, 2020. Nash has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2019 $4,400,000 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021 3,080,000 Long-term loan-11% Interest, payable on January 1 of each year. Principal payable on January 1, 2024 2,200,000 Assume that Nash completed the office and warehouse building on December 31, 2020, as planned at a total cost of $11,440,000, and the weighted-average amount of accumulated expenditures was $7,920,000. Compute the avoidable Interest on this project. (Use interest rates rounded to 2 decimal places, 0.g. 7.58% for commutational purposes and round final answers to 0 decimal places, e.g. 5,275.) Avoidable Interest Compute the depreciation expense for the year ended December 31, 2021. Nash 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 $660,000. (Round answer to o decimal places, e.g. 5,275.) Depreciation Expense Click if you would like to Show Work for this question: Open Show Work Exercise 10-08 On December 31, 2019, Martinez Inc. borrowed $3,300,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $396,000; June 1, $660,000; July 1, $1,650,000; December 1, $1,650,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $4,400,000 6-year, 11% note, dated December 31, 2017, interest payable annually $1,760,000 2. March 1, 2020, expenditure included land costs of $165,000 3. Interest revenue earned in 2020 $53,900 Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. The amount of interest Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit December 31, 2020 Click if you would like to Show Work for this question: Open Show Work Problem 10-08 Y. Culver Corporation wishes to exchange a machine used in its operations. Culver has received the following offers from other companies in the industry. 1. Larkspur Company offered to exchange a similar machine plus $32,660. (The exchange has commercial substance for both parties.) 2. Cullumber Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.) 3. Riverbed Company offered to exchange a similar machine, but wanted $4,260 in addition to Culver's machine. (The exchange has commercial substance for both parties.) In addition, Culver contacted Marin Corporation, a dealer in machines. To obtain a new machine, Culver must pay $132,060 in addition to trading in its old machine. Culver Larkspur Cullumber Riverbed Marin Machine cost $227,200 $170,400 $215,840 $227,200 $184,600 Accumulated depreciation 85,200 63,900 100,820 106,500 -0- Fair value 130,640 97,980 130,640 134,900 262,700 For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) No. Account Titles and Explanation Debit Credit 1. Culver Corporation