This Year, Benjamin Hassell Paid $15,900 of Interest on a Mortgage

question 93

Essay

This year, Benjamin Hassell paid $15,900 of interest on a mortgage on his home (Benjamin borrowed $530,000 in 2015 to buy the residence and it is currently worth $848,000), $11,600 on a $145,000 home-equity loan on his home, and $10,050 of interest on a mortgage on his vacation home (loan of $335,000; home purchased for $435,000 in 2016; home is not rented out at any time). How much interest expense can Benjamin deduct as an itemized deduction?

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Definitions:

Activity-based Costing

A method of costing that identifies individual activities as fundamental cost objects and assigns costs to them based on their use of resources.

Idle Capacity

Represents the condition where production resources are not used to their full potential, resulting in unutilized capacity.

Plantwide Overhead Rate

A single overhead absorption rate used throughout a manufacturing plant to allocate overhead costs to products.

Activity-based Costing

A costing method that allocates overhead and indirect costs to specific activities, providing a more accurate representation of the costs associated with producing a product.