Question

Option #2: Accounting for Intangible Assets and Natural Resources

Part 1

1. Assume you are the chief accountant of Exxon Mobil. Describe to the Board of Directors the accounting for natural resources, including their acquisition, and cost allocation (depletion). Use a real-world example to explain your answers.
2. Assume you are the chief accountant of Microsoft Corporation. Describe to the Board of Directors the accounting for intangible assets, including their acquisition and cost allocation (amortization). Use an example in your explanations.
3. On June 1, ABC Inc. purchased a patent for $75,000 with a useful life of 10 years. Prepare the journal entry to amortize the patent at the end of the first year assuming ABC Inc. follows a calendar year.
4. On January 4, ABC Inc. purchased a music distributor's collection of lyrics and songs for $425,000. The copyrights are expected to last another ten years. Prepare the journal entry to amortize the copyright at the end of the first year.

Additional requirements

Your responses to the questions (a) and (b) above as well as your analysis should be at least one page and must include the title and reference pages. Your paper must be formatted according to the CSU-Global Guide to Writing and APA (Links to an external site.)Links to an external site.. Review the grading rubric to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.

Part 2

For each item listed below, enter a code letter in the blank space to indicate the usage allocation terminology for the item. Use the following codes for your answer:

A—Amortization                P—Depletion

D—Depreciation                N—None of these

____     1. Goodwill                                                                         ____    7. Timberlands

____     2. Land                                                                ____    8. Franchises (indefinite life)

____     3. Buildings                                                                        ____    9. Licenses (limited life)

____     4. Patents                                                                           ____   10. Land Improvements

____     5. Copyrights                                                                     ____   11. Oil Deposits

____     6. Research and development costs                       ____   12. Equipment

Answer 1