Part 1. Georgia-Pacific Corporation is one of the world's largest forest products companies. The company's balance sheet includes the assets Natural Gas, Oil, and Coal.

Suppose Georgia-Pacific paid \(\$ 1.8\) million cash for a lease giving the firm the right to work a mine that contained an estimated 125,000 tons of coal. Assume that the company paid \(\$ 10,000\) to remove unwanted buildings from the land and \(\$ 45,000\) to prepare the surface for mining. Further assume that Georgia-Pacific signed a \(\$ 20,000\) note payable to a landscaping company to return the land surface to its original condition after the lease ends. During the first year, Georgia-Pacific removed 35,000 tons of coal, which it sold on account for \(\$ 17\) per ton.

\section*{Required}

Make general journal entries to record all transactions related to the coal, including depletion and sale of the first-year production.

Part 2. Collins Foods International, Inc., is the majority owner of Sizzler Restaurants. The company's balance sheet reports the asset Cost in Excess of Net Assets of Purchased Businesses. Assume that Collins purchased this asset as part of the acquisition of another company, which carried these figures:

\section*{Required}
1. What is another title for the asset Cost in Excess of Net Assets of Purchased Businesses?
2. Make the general journal entry to record Collins's purchase of the other company for \(\$ 1.7\) million cash.
3. Assuming Collins amortizes Cost in Excess of Net Assets of Purchased Businesses over 20 years, record the straight-line amortization for one year.

Part 3. Suppose Collins purchased a Sizzler franchise license for \(\$ 240,000\). In addition to the basic purchase price, Collins also paid a lawyer \(\$ 20,000\) for assistance with the negotiations. Collins management believes the appropriate amortization period for its cost of the franchise license is eight years.
\section*{Required}
Make general journal entries to record the franchise transactions, including straight-line amortization for one year.

Transcribed Image Text:

Book value of assets...... Market value of assets. Liabilities............nces $2.4 million 3.1 million 2.2 million