Solution 1:
Weighted average interest rate on general borrowings = 10%* $840,000 /$1,440,000 + 11%* $600,000 / $1,440,000
= 10.42%
Avoidable interest = ($1,200,000*12%) + ($2,160,000 - $1,200,000) * 10.42%
= $144,000 + $100,032 = $244,032
Solution 2:
Total cost of building = $3,120,000 + $244,032 = $3,364,032
Depreciation expense for 2021 = (Cost - Salvage value) / Useful life = ($3,364,032 - $180,000)/30 = $106,134
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