Chapter 9, Problem 8AP

a)

To determine

Compute the amount of depreciation expense on the heavy equipment for each of the first three years of the asset’s life.

b)

To determine

Compute the amount of amortization on the patent for each of the two years it was owned by Incorporation R.

c)

To determine

Prepare the plant and intangible assets section of Incorporation R balance sheet at the end of the first and second years. Calculate the amount of the gain or loss on the patent that would be included in the second year’s income statement.