Lakeshore Gelato Company is constructing a production complex that qualifies for interest capitalization. The following information is available:

$$ Capitalization period: January $1,20$Y$1,$ to June $30,20$Y$2$

$$ Expenditures on project:

$20$Y$1$:

January $1$ $ $648,000$

May $1537,000$

October $1620,000$

$20$Y$2$:

March $11,940,000$

June $30445,000$

$$ Amounts borrowed and outstanding:

$$1\mathrm{.}5$ million borrowed at $9\%,$ specifically for the project

$$6$ million borrowed on July $1,2019,$ at $7\%$

$$13$ million borrowed on January $1,2018,$ at $8\%$

Required:

$($Round all final numeric answers to two decimal places.$)$

$1.$ Compute the amount of interest costs capitalized each year.

$2.$ If it is assumed that the production complex has an estimated life of $20$ years and a residual value of $$0,$ compute the straight$-$line depreciation in $20$Y$2.$

$3.$ What would be disclosed on the $20$Y$1$ and $20$Y$2$ financials

a$)$ Income Statement

b$)$ Balance Sheet