The Company purchased an asset on January 1, 2005, for $200,000. The straight-line method of depreciation is used for book purposes, resulting in depreciation of $50,000 per year. An accelerated method is used for tax purposes, resulting in depreciation of $80,000, $60,000, $40,000, and $20,000 for the years 2005, 2006, 2007, and 2008, respectively. Assume that the tax rate is 40 percent for all years and that depreciation is the only temporary difference between book and tax purposes. The 2005 journal entry would include a: A. debit to Deferred Tax Liability of $12,000 B. debit to Deferred Tax Liability of $4,000 C. credit to Deferred Tax Asset of $4,000 D. credit to Deferred Tax Liability of $12,000

Akron Incorporated purchased an asset at the beginning of Year 1 for 375,000. The estimated residual value is 15,000. Akron estimates that the asset has a service life of 5 years. Calculate the depreciation expense using the sum-of-the-years-digits method for Years 1 and 2 of the assets life.

On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.

The following intangible assets were purchased by Hanna Unlimited: A. A patent with a remaining legal life of twelve years is bought, and Hanna expects to be able to use it for six years. It is purchased at a cost of $48,000. B. A copyright with a remaining life of thirty years is purchased, and Hanna expects to be able to use it for ten years. It is purchased for $70,000. Determine the annual amortization amount for each intangible asset.