Question

lntarect rato 3. Intangible Assets a. Depletion Baker purchased a gravel field for $500,000. It should produce gravel for 8 years and then have a salvage value of $50,000. The DNR requires that the land be restored so that it can be used as a park. The anticipated restoration cost is $75,000. Money would be set aside for this purpose and would earn a 4% annual return. Calculate the depletion base sO0,000+75,000-75000) At the end of the first year, 50,000 tons of gravel are removed and it is estimated that 450,000 tons remain at year-end, Calculate the cost per ton of gravel for the first year $75000-50.000525000 .05per tin 1.05*SO,00052 500 1St yr C ton 10n b. Software Cable is developing software, which it will license to various users. During 2017, $70,000 was spent developing the software prior to reaching technological feasibility and starting the development stage. During the development stage, another $150,000 was spent to prepare the software for licensing. The software began to be licensed during 2018. Revenues were $200,000 and it is anticipated that another $400,000will be earned after 2018 over 3 remaining years (2019-2021). Estimated NRV at the end of 2018 is $125,000. Calculate the amortization expense for 2018

Answer 1

it oudities as an Aset due to which it is enpense and hence becomed rangte. Cost of Intangible shet which is 450,000.- And 70,000 is not caplarised in me Nature of Resechit hred to profit & Loss account. 2018 – 2,00,000. 2019-2021 – 4,00,000.- Amortisatim expense for 2018 is 59000x 2,09,000 = 50,000 -6,00,000