Tamarisk Industries Inc. started construction of a manufacturing facility for its own use at an estimated cost of $9,000,000 on January 1, 2017. Tamarisk expected to complete the building by December 31, 2017. Tamarisk’s debt, all of which was outstanding during the construction period, was as follows.● Construction loan—11% interest, payable semiannually, issued December 31, 2016; $4,500,000 ● Long-term loan #1 – 10% interest, payable on January 1 of each year. Principal payable on January 1, 2019; $1,350,000 ● Long-term loan #2—12% interest, payable on December 31 of each year. Principal payable on December 31, 2025; $3,150,000 Avoidable interest is 679,680.Compute the depreciation expense for the year ended December 31, 2018. Tamarisk estimated the facility’s useful life to be 25 years with a salvage value of $900,000. Tamarisk elected to depreciate the facility on a straight-line basis.

Depreciation refers to that amount of monetary value of an assets which decreases overtime due to…

Answered: Tamarisk Industries Inc. started…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Tamarisk Industries Inc. started construction of a manufacturing facility for its own use at an estimated cost of $9,000,000 on January 1, 2017. Tamarisk expected to complete the building by December 31, 2017. Tamarisk’s debt, all of which was outstanding during the construction period, was as follows.

●		Construction loan—11% interest, payable semiannually, issued December 31, 2016; $4,500,000
●		Long-term loan #1 – 10% interest, payable on January 1 of each year. Principal payable on January 1, 2019; $1,350,000
●		Long-term loan #2—12% interest, payable on December 31 of each year. Principal payable on December 31, 2025; $3,150,000

Avoidable interest is 679,680.

Compute the depreciation expense for the year ended December 31, 2018. Tamarisk estimated the facility’s useful life to be 25 years with a salvage value of $900,000. Tamarisk elected to depreciate the facility on a straight-line basis.

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