Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows: Timber rights on a tract of land were purchased for $630,000 on February 22. The stand of timber is estimated at 3,500,000 board feet. During the current year, 900,000 board feet of timber were cut and sold. On December 31, the company determined that $1,210,000 of goodwill was impaired. Governmental and legal costs of $4,860,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 15 years. Amortization is to be for three-fourths of a year. Required: 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. Do not round your intermediate calculation. Item Impairment, Amortization or Depletion Expense a. $fill in the blank b. $fill in the blank c. $fill in the blank Feedback 2. Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item. If an amount box does not require an entry, leave it blank. a. Depletion Expense Depletion Expense Accumulated Depletion Accumulated Depletion b. Loss from Impaired Goodwill Loss from Impaired Goodwill Goodwill Goodwill c. Amortization Expense-Patents Amortization Expense-Patents Patents Patents

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Amortization and Depletion Entries

Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:

Timber rights on a tract of land were purchased for $630,000 on February 22. The stand of timber is estimated at 3,500,000 board feet. During the current year, 900,000 board feet of timber were cut and sold.
On December 31, the company determined that $1,210,000 of goodwill was impaired.
Governmental and legal costs of $4,860,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 15 years. Amortization is to be for three-fourths of a year.

Required:

1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. Do not round your intermediate calculation.

Item	Impairment, Amortization or Depletion Expense
a.	$fill in the blank
b.	$fill in the blank
c.	$fill in the blank

Feedback

2. Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item. If an amount box does not require an entry, leave it blank.

a.	Depletion Expense	Depletion Expense
	Accumulated Depletion	Accumulated Depletion
b.	Loss from Impaired Goodwill	Loss from Impaired Goodwill
	Goodwill	Goodwill
c.	Amortization Expense-Patents	Amortization Expense-Patents
	Patents	Patents

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