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 $1,150,000 of goodwill was impaired. b. Governmental and legal costs of $6,336,000 were incurred on September 30 in obtaining a patent with an estimated economic life of 12 years. Amortiration is to be for one fourth of a year Timber rights on a tract of land were purchased for $990,000 on February 4. The stand of timber is estimated at 4,500,000 board feet. During the current year, 1.200,000 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 2. Joumate the adjusting entries required to record the mo tor depletion or m e nt for each item Amortization Expense Patents

Answer 1

1
a	1,150,000
b	132,000
c	264,000
a	Loss on impairment of goodwill	1,150,000
b	$6,336,000/12 years	528,000
	1/4 of $528,000	132,000
c	$990,000/4,500,000 board feet	0.22
	0.22 per board feet * 1200000 board feet	264,000
2	General Journal	Debit	Credit
a	Loss on Impairment of Goodwill	1,150,000
	Good will		1,150,000
b	Amortization Expense—Patents	132,000
	Patents		132,000
c	Depletion Expense.	264,000
	Accumulated Depletion		264,000