moly ated oil and natural gas reserves. Its annual revenues exceed $21.4 bill 60
ID: 2599964 • Letter: M
Question
moly ated oil and natural gas reserves. Its annual revenues exceed $21.4 bill 600 on pounds of cobalt, and 390 million barrels of ume that in February 2016, Freeport-McMoRan paid $800,000 g March, it spent $70,000 in preparing the deposit for exploitation. Durin total cubic yard n Jaary 2017, the company spent another $6,000 for additional developmental work that increased the estimated productive capacity of the mineral deposit. for a mineral deposit in Indonesia. It was estimated that 1,000,000 xtracted. Dur- s could be extracted economically. During 2016, 60,000 cubic yards were e Required 1. Compute the acquisition cost of the deposit in 2016. 2. Compute depletion for 2016. 3. Compute the net book value of the deposit after payment of the January 2017 developmental costs. Computing and Reporting the Acquisition and Amortization of Three Different Intangible Assets Trotman Company had three intangible assets at the end of 2016 (end of the accounting year) . Computer software and Web development technology purchased on January 1, 2015, for $70.000. The E8-20 LO8-6 technology is expected to have a four-year useful life to the companyExplanation / Answer
1. Acquisition cost:
Technology=$70,000
Patent=$6,000
Trademark=$13,000
2.
Amortization in 2016:
Technology:70,000/4=$17,500
Legal life of patent is 20 years . Five years already elapsed so Amortization is for 15 years now
Patent:6000/15=$400
Trademark: no Amortization
3.
Income statement:
Amortization expense($17500+$400)=$17,900
Balance sheet:
Intangibles:
Technology{70,000-(17500×2years)}=$35,000
Patent(6000-400)=$5,600
Trademark=$13,000
Total intangible assets=$53,600
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