Question

Amortization and Depletion Entries Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows: a. On December 31, the company determined that $880,000 of goodwill was impaired. b. Governmental and legal costs of $4,968,000 were incurred on September 30 in obtaining a patent with an estimated economic life of 12 years. Amortization is to be for one-fourth of a year. c. Timber rights on a tract of land were purchased for $805,000 on February 4. The stand of timber is estimated at 3,500,000 board feet. During the current year, 900,000 board feet of timber were cut and sold. Required: 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. Do not round your intermediate calculation. Item Impairment, Amortization or Depletion Expense $ 150,000 x
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Answer 1

Debit Credit 1 Loss on Impirment of Goodwill 880000 Goodwill 880000 (Impairment of Goodwill 880000) Amortization Expense Patent 2 103500 Patents 103500 Patent value 4968000, Estimated Economic Life 12 years Amortization Expense per year 4968000/12 414000 Amortization is to be done for one forth of a year =414000/4 103500 Depletion Expenses Accumulated Depletion 207000 207000 Purchased Cost = 805000, Stand of Timber 3500000 board Feet Per board feet cost of Timber 805000/3500000 0.23/ board feet Depletion of 900000 board feet of timber = 900000*0.23 = 207000