BlueFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $ 7,000,000 on January 1, 2020. Blue expected to complete the building by December 31, 2020. Blue has the following debt obligations outstanding during the construction period. Construction loan- 12% interest, payable semiannually, issued December 31, 2019 $ 2,800,000 Short-term loan- 10% interest, payable monthly, and principal payable at maturity on May 30, 2021 2,100,000 Long-term loan- 11% interest, payable on January 1 of each year. Principal payable on January 1, 2024
BlueFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $ 7,000,000 on January 1, 2020. Blue expected to complete the building by December 31, 2020. Blue has the following debt obligations outstanding during the construction period. Construction loan- 12% interest, payable semiannually, issued December 31, 2019 $ 2,800,000 Short-term loan- 10% interest, payable monthly, and principal payable at maturity on May 30, 2021 2,100,000 Long-term loan- 11% interest, payable on January 1 of each year. Principal payable on January 1, 2024
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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BlueFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $ 7,000,000 on January 1, 2020. Blue expected to complete the building by December 31, 2020. Blue has the following debt obligations outstanding during the construction period.
Construction loan- 12% interest, payable semiannually, issued December 31, 2019 | $ 2,800,000 | |
Short-term loan- 10% interest, payable monthly, and principal payable at maturity on May 30, 2021 | 2,100,000 | |
Long-term loan- 11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 | 1,400,000 |
![Compute the depreciation expense for the year ended December 31, 2021. Blue 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 $ 420,000. (Round answer to O decimal
places, e.g. 5,275.)
Depreciation Expense
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3b13995d-9425-44a6-84e9-644f4357c0b0%2F2aa370f1-eec6-4590-93ac-1552a086bd2b%2Fqwh5xfc_processed.png&w=3840&q=75)
Transcribed Image Text:Compute the depreciation expense for the year ended December 31, 2021. Blue 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 $ 420,000. (Round answer to O decimal
places, e.g. 5,275.)
Depreciation Expense
$
![Assume that Blue completed the office and warehouse building on December 31, 2020, as planned at a total cost of $ 7,280,000,
and the weighted-average amount of accumulated expenditures was $ 5,040,000. 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 0 decimal places, e.g.
5,275.)
Avoidable Interest
$
568960
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3b13995d-9425-44a6-84e9-644f4357c0b0%2F2aa370f1-eec6-4590-93ac-1552a086bd2b%2Fnj6gk3j_processed.png&w=3840&q=75)
Transcribed Image Text:Assume that Blue completed the office and warehouse building on December 31, 2020, as planned at a total cost of $ 7,280,000,
and the weighted-average amount of accumulated expenditures was $ 5,040,000. 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 0 decimal places, e.g.
5,275.)
Avoidable Interest
$
568960
%24
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