Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:

A. Timber rights on a tract of land were purchased for $1,600,000 on February 22. The stand of timber is estimated at 5,000,000 board feet. During the current year, 1,100,000 board feet of timber were cut and sold.

B. On December 31, the company determined that $3,750,000 of goodwill was impaired.

C. Governmental and legal costs of $6,600,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 12 years. Amortization is to be for three-fourths of a year.

Required:

1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.

2. Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item. Refer to the Chart of Accounts for exact wording of account titles.

1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the items in the Instructions.

A.

B.

C.

CHART OF ACCOUNTSGeneral Ledger

ASSETS

110 Cash

111 Petty Cash

112 Accounts Receivable

114 Interest Receivable

115 Notes Receivable

116 Merchandise Inventory

117 Supplies

119 Prepaid Insurance

120 Land

123 Vehicles

124 Accumulated Depreciation-Vehicles

125 Equipment

126 Accumulated Depreciation-Equipment

130 Timber Rights

131 Accumulated Depletion

132 Goodwill

133 Patents

LIABILITIES

210 Accounts Payable

211 Salaries Payable

213 Sales Tax Payable

214 Interest Payable

215 Notes Payable

EQUITY

310 Common Stock

311 Retained Earnings

312 Dividends

REVENUE

410 Sales

610 Interest Revenue

620 Gain on Sale of Vehicles

621 Gain on Sale of Equipment

622 Gain on Sale of Timber Rights

623 Gain from Sale of Goodwill

EXPENSES

510 Cost of Merchandise Sold

520 Salaries Expense

521 Advertising Expense

522 Depreciation Expense-Vehicles

523 Delivery Expense

524 Repairs and Maintenance Expense

529 Selling Expenses

531 Rent Expense

532 Depreciation Expense-Equipment

533 Depletion Expense

534 Amortization Expense-Patents

535 Insurance Expense

536 Supplies Expense

539 Miscellaneous Expense

710 Interest Expense

720 Loss on Sale of Vehicles

721 Loss on Sale of Equipment

722 Loss on Sale of Timber Rights

723 Loss from Impaired Goodwill

2. Journalize the transactions and the adjusting entries on December 31. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 2 through 3 of the journal.

a. Timber rights on a tract of land were purchased for $1,600,000 on February 22. The stand of timber is estimated at 5,000,000 board feet. During the current year, 1,100,000 board feet of timber were cut and sold.

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b. On December 31, the company determined that $3,750,000 of goodwill was impaired.

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c. Governmental and legal costs of $6,600,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 12 years. Amortization is to be for three-fourths of a year.

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Question

Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:

A.	Timber rights on a tract of land were purchased for $1,600,000 on February 22. The stand of timber is estimated at 5,000,000 board feet. During the current year, 1,100,000 board feet of timber were cut and sold.
B.	On December 31, the company determined that $3,750,000 of goodwill was impaired.
C.	Governmental and legal costs of $6,600,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 12 years. Amortization is to be for three-fourths of a year.

Required:

1.	Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.
2.	Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item. Refer to the Chart of Accounts for exact wording of account titles.

1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the items in the Instructions.

A.
B.
C.

CHART OF ACCOUNTSGeneral Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
114	Interest Receivable
115	Notes Receivable
116	Merchandise Inventory
117	Supplies
119	Prepaid Insurance
120	Land
123	Vehicles
124	Accumulated Depreciation-Vehicles
125	Equipment
126	Accumulated Depreciation-Equipment
130	Timber Rights
131	Accumulated Depletion
132	Goodwill
133	Patents

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends

	REVENUE
410	Sales
610	Interest Revenue
620	Gain on Sale of Vehicles
621	Gain on Sale of Equipment
622	Gain on Sale of Timber Rights
623	Gain from Sale of Goodwill

	EXPENSES
510	Cost of Merchandise Sold
520	Salaries Expense
521	Advertising Expense
522	Depreciation Expense-Vehicles
523	Delivery Expense
524	Repairs and Maintenance Expense
529	Selling Expenses
531	Rent Expense
532	Depreciation Expense-Equipment
533	Depletion Expense
534	Amortization Expense-Patents
535	Insurance Expense
536	Supplies Expense
539	Miscellaneous Expense
710	Interest Expense
720	Loss on Sale of Vehicles
721	Loss on Sale of Equipment
722	Loss on Sale of Timber Rights
723	Loss from Impaired Goodwill

2. Journalize the transactions and the adjusting entries on December 31. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 2 through 3 of the journal.

a. Timber rights on a tract of land were purchased for $1,600,000 on February 22. The stand of timber is estimated at 5,000,000 board feet. During the current year, 1,100,000 board feet of timber were cut and sold.

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1		Adjusting Entries
2
3

b. On December 31, the company determined that $3,750,000 of goodwill was impaired.

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3

c. Governmental and legal costs of $6,600,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 12 years. Amortization is to be for three-fourths of a year.

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1		Adjusting Entries
2
3

Accepted Answer

Answered: Image /qna-images/answer/01a34b03-a159-4e51-b37a-af209c96e697.jpg