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Average accumulated expenditure and total cost

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Wheeler Corporation constructed a building at a cost of $20,000,000. Average accumulated expenditures were $8,000,000, actual interest was $1,200,000, and avoidable interest was $600,000. If the salvage value is $1,600,000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is

Sweet Knee Company is constructing a building. Construction began in 2008 and the building was completed 12/31/08. Sweet Knee made payments to the construction company of $1,000,000 on 7/1, $2,100,000 on 9/1, and $2,000,000 on 12/31. Average accumulated expenditures were

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Solution Summary

The solution explains how to calculate the average accumulated expenditures and the total cost of the building.

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1. In case of construction of a building, the avoidable interest is capitalized. The cost of the building will be 20,000,000+600,000=20,600,000. ...

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