Data related to the acquisition of timber rights and intangible assets during th
ID: 2497537 • Letter: D
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 $2,331,260 on February 22. The stand of timber is estimated at 5,686,000 board feet. During the current year, 1,159,400 board feet of timber were cut and sold. B. On December 31, the company determined that $3,704,000 of goodwill was impaired. C. Governmental and legal costs of $7,038,000 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. Starting questions 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. $
Explanation / Answer
Details Timber rights Value $ 2,331,260 Board feet measure of Timber Stand 5,686,000 Board feet Value per Board feet Timber stand $ 0.410 Current year sale of Timber stand in Board feet 1,159,400 Value of Timber stand sold $ 475,354.00 A Amortization of Timber rights for the year $ 475,354.00 B Good will impairment for the year $ 3,704,000.00 C Patent Capitalization cost 7,038,000 Estimated life in years 12 Amortization per year 586,500 Amortization for 3/4th of year $ 439,875.00 Journal Entries sr No Account Title Dr $ Cr $ A Accumulated Amortization-Timber rights 475,354
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