Huffman Corporation Constructed a Building at a Cost of $20,000,000

question 121

Multiple Choice

Huffman 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

• A)$475,000.
• B)$490,000.
• C)$515,000.
• D)$675,000.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a given market.

Opportunity Cost

The benefit that is missed or foregone when choosing one alternative over another.

Excess Capacity

A situation where a company's production facilities are capable of producing more than the demand for its products or services.

Direct Expenses

Costs that can be directly attributed to the production of specific goods or services, such as raw materials and direct labor.