How do I solve this? It\'s exercist 10-7 Harrisburg Furniture Company started co

Question

How do I solve this? It's exercist 10-7

Harrisburg Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $5,017,800 on January 1, 2014. Harrisburg expected to complete the building by December 31, 2014. Harrisburg has the following debt obligations outstanding during the construction period.

Construction loan—11% interest, payable semiannually, issued December 31, 2013 $2,019,000
Short-term loan—9% interest, payable monthly, and principal payable at maturity on May 30, 2015 1,617,800
Long-term loan—10% interest, payable on January 1 of each year; principal payable on January 1, 2018


Compute the depreciation expense for the year ended December 31, 2015. Harrisburg 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 $316,100. 1,022,500

Explanation / Answer

Estimated cost of building     $5,017,800

Less: Salvage value                 $316,100

Depreciable amount             $4,701,700

Useful life of the building 30 years thus annual depreciation will be $4,701,700 / 30   = $1,56,723.33

Depreciation expense for the year ended December 31, 2015 is $156723.33

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