Question

Partial-Year Depreciation Equipment acquired at a cost of $67,000 has an estimated residual value of $4,000 and an estimated useful life of 10 years. It was placed into service on April 1 of the current fiscal year, which ends on December 31 If necessary, round your answers to the nearest cent a. Determine the depreciation for the current fiscal year and for the following fiscal year by the straight-line method. Depreciation Year 1 Year 2 b. Determine the depreciation for the current fiscal year and the following fiscal year by the double-declining-balance method. Depreciation Year 1 Year 2 Amortization Entries Kleen Company acquired patent rights on January 100 of Year 1 for $408,000. The patent has a useful life equal to its legal life of eight years. On January 7 of Year 4, Kleen successfully defended the patent in a lawsuit at a cost of $20,500. If required, round your answer to the nearest dollar a. Determine the patent amortization expense for the Year 4 ended December 31. b. Journalize the adjusting entry on December 31 of Year 4 to recognize the amortization. Depletion Entries Alaska Mining Co. acquired mineral rights for $27,740,000. The mineral deposit is estimated at 146,000,000 tons. During the current year, 21,900,000 tons were mined and sold. a. Determine the amount of depletion expense for the current year. Round the depletion rate to two decimals places b. Journalize the adjusting entry on December 31 to recognize the depletion expense.

Answer 1

1a) Depreciation expense : Straight line method

	Depreciation
Year 1	(67000-4000/10)*9/12 = 4725
Year 2	(67000-4000/10) = 6300

1b) Depreciation expense : Double decline method

Double decline rate = 100/10*2 = 20%

	Depreciation
Year 1	67000*20%*9/12 = 10050
Year 2	67000*20%*3/12+67000*80%*20%*9/12 = 11390

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