Crane Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $2,500,000 on January 1, 2025. Crane expected to complete the building by December 31, 2025. Crane has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2024 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026 Long-term loan-11% interest, payable on January 1 of each year; principal payable on January 1, 2029 $1,000,000 750,000 500,000 (a) Your answer is correct. Assume that Crane completed the office and warehouse building on December 31, 2025, as planned, at a total cost of $2,600,000, and the weighted-average amount of accumulated expenditures was $1,800,000. 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 O decimal places, e.g. 5,275.) (b) Avoidable interest $ 203200 eTextbook and Media Attempts: 1 of 3 used × Your answer is incorrect. Compute the depreciation expense for the year ended December 31, 2026. Crane 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 $150,000. (Round answer to O decimal places, e.g. 5,275) Depreciation expense $ 118440
Crane Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $2,500,000 on January 1, 2025. Crane expected to complete the building by December 31, 2025. Crane has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2024 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026 Long-term loan-11% interest, payable on January 1 of each year; principal payable on January 1, 2029 $1,000,000 750,000 500,000 (a) Your answer is correct. Assume that Crane completed the office and warehouse building on December 31, 2025, as planned, at a total cost of $2,600,000, and the weighted-average amount of accumulated expenditures was $1,800,000. 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 O decimal places, e.g. 5,275.) (b) Avoidable interest $ 203200 eTextbook and Media Attempts: 1 of 3 used × Your answer is incorrect. Compute the depreciation expense for the year ended December 31, 2026. Crane 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 $150,000. (Round answer to O decimal places, e.g. 5,275) Depreciation expense $ 118440
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 45P
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Transcribed Image Text:Crane Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of
$2,500,000 on January 1, 2025. Crane expected to complete the building by December 31, 2025. Crane has the following debt
obligations outstanding during the construction period.
Construction loan-12% interest, payable semiannually, issued December 31, 2024
Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026
Long-term loan-11% interest, payable on January 1 of each year; principal payable on January 1, 2029
$1,000,000
750,000
500,000
(a)
Your answer is correct.
Assume that Crane completed the office and warehouse building on December 31, 2025, as planned, at a total cost of $2,600,000,
and the weighted-average amount of accumulated expenditures was $1,800,000. 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 O decimal places, e.g.
5,275.)
(b)
Avoidable interest $
203200
eTextbook and Media
Attempts: 1 of 3 used
× Your answer is incorrect.
Compute the depreciation expense for the year ended December 31, 2026. Crane 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 $150,000. (Round answer to O decimal
places, e.g. 5,275)
Depreciation expense
$
118440
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