Skysong Industries Inc. started construction of a manufacturing facility for its own use at an estimated cost of $8,600,000 on January 1, 2017. Skysong expected to complete the building by December 31, 2017. Skysong’s debt, all of which was outstanding during the construction period, was as follows.● Construction loan—11% interest, payable semiannually, issued December 31, 2016; $4,300,000 ● Long-term loan #1 – 10% interest, payable on January 1 of each year. Principal payable on January 1, 2019; $1,290,000 ● Long-term loan #2—12% interest, payable on December 31 of each year. Principal payable on December 31, 2025; $3,010,000 Assume that Skysong completed the facility on December 31, 2017, at a total cost of $8,858,000, and the weighted-average amount of accumulated expenditures was $5,848,000.A. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% and round final answer to 0 decimal places, e.g. 5,275.)Avoidable Interest?????$enter the avoidable interest in dollars B. Compute the depreciation expense for the year ended December 31, 2018. Skysong estimated the facility’s useful life to be 25 years with a salvage value of $860,000. Skysong elected to depreciate the facility on a straight-line basis.Depreciation Expense? $$$$$

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Answered: A. Compute the avoidable interest on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Skysong Industries Inc. started construction of a manufacturing facility for its own use at an estimated cost of $8,600,000 on January 1, 2017. Skysong expected to complete the building by December 31, 2017. Skysong’s debt, all of which was outstanding during the construction period, was as follows.

●		Construction loan—11% interest, payable semiannually, issued December 31, 2016; $4,300,000
●		Long-term loan #1 – 10% interest, payable on January 1 of each year. Principal payable on January 1, 2019; $1,290,000
●		Long-term loan #2—12% interest, payable on December 31 of each year. Principal payable on December 31, 2025; $3,010,000

Assume that Skysong completed the facility on December 31, 2017, at a total cost of $8,858,000, and the weighted-average amount of accumulated expenditures was $5,848,000.

A. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% and round final answer to 0 decimal places, e.g. 5,275.)

Avoidable Interest

?????

$enter the avoidable interest in dollars

B. Compute the depreciation expense for the year ended December 31, 2018. Skysong estimated the facility’s useful life to be 25 years with a salvage value of $860,000. Skysong elected to depreciate the facility on a straight-line basis.

Depreciation Expense? $$$$$

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