Exercise 10-7 (Part Level Submission) Buffalo Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $4,993,100 on January 1, 2017. Buffalo expected to complete the building by December 31, 2017. Buffalo has the following debt obligations outstanding during the construction period.

Construction loan-10% interest, payable semiannually, issued December 31, 2016 $1,982,700 Short-term loan-8% interest, payable monthly, and principal payable at maturity on May 30, 2018 1,586,000 Long-term loan-9% interest, payable on January 1 of each year. Principal payable on January 1, 2021 1,001,500

Collapse question part (a)

Correct answer. Your answer is correct.

351248 Assume that Buffalo completed the office and warehouse building on December 31, 2017, as planned at a total cost of $5,234,800, and the weighted-average amount of accumulated expenditures was $3,806,700. 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.)

Your answer is incorrect. Try again. Compute the depreciation expense for the year ended December 31, 2018. Buffalo 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 $301,400.