1 On April 1, 2014, Cadcorp invested $1,000,000 in a mine estimated to have 750,000 tons of high quality Gold During April to December of that year, 150,000 tons of the gold were mined (a) Prepare the journal entry to record depletion (b) Assume that the 150,000 tons of ore were mined, but only 100,000 units were sold How are the costs applicable to the 50,000 unsold units reported 2 Presented below is the intangible assets section of Bolton Company at December 31, 2015 Patents ($70,000 cost less $7,000 amortization) $63,000 Franchises ($48,000 cost less $19,200 amortization) 28,800 Total 91,800 The patent was acquired in January 2015 and has a useful life of 10 years The franchise was acquired in January 2014 and also has a useful life of 10 years The following cash transactions affected intangible assets during 2016 Jan 2 Paid $27,000 legal costs to successfully defend the patent against infringement by another company Jan June Developed a new product, incurring $140,000 in research and development costs A patent was granted for the product on July 1 Its useful life is equal to its legal life Sept 1 Paid $50,000 to an extremely large defensive lineman to appear in commercials advertising the company's products The commercials will air in September and October Oct 1 Acquired a franchise for $140,000 The franchise has a useful life of 50 years (a) Prepare journal entries to record the transactions above (b) Prepare journal entries to record the 2016 amortization expense (c) Prepare the intangible assets section of the balance sheet at December 31, 2016 3 ABC Company and XYZ Corporation are comparable size companies involved in the fashion business Each company depreciates its plant assets using the straight line method Their financial statements reveal the following information ABC Co XYZ Corp Net income $ 800,000 $1,000,000 Sales revenue 1,300,000 1,180,000 Average total assets 2,500,000 2,000,000 Average plant assets 1,800,000 1,000,000 (a) For each company, calculate the asset turnover (b) Based on your calculations in part (a), comment on the relative effectiveness of the two companies in using their assets to generate sales and produce net income

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1. On April 1, 2014, Cadcorp invested $1,000,000 in a mine estimated to have 750,000 tons of high quality Gold. During April to December of

1. On April 1, 2014, Cadcorp invested $1,000,000 in a mine estimated to have 750,000 tons of high quality Gold. During April to December of that year, 150,000 tons of the gold were mined.

(a) Prepare the journal entry to record depletion

(b) Assume that the 150,000 tons of ore were mined, but only 100,000 units were sold. How are the costs applicable to the 50,000 unsold units reported?

2. Presented below is the intangible assets section of Bolton Company at December 31, 2015.

Patents ($70,000 cost less $7,000 amortization) $63,000

Franchises ($48,000 cost less $19,200 amortization) 28,800

Total 91,800

The patent was acquired in January 2015 and has a useful life of 10 years. The franchise was acquired in January 2014 and also has a useful life of 10 years. The following cash transactions affected intangible assets during 2016.

Jan. 2	Paid $27,000 legal costs to successfully defend the patent against infringement by another company.
Jan-June	Developed a new product, incurring $140,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life.
Sept. 1	Paid $50,000 to an extremely large defensive lineman to appear in commercials advertising the company's products. The commercials will air in September and October.
Oct. 1	Acquired a franchise for $140,000. The franchise has a useful life of 50 years.

(a) Prepare journal entries to record the transactions above.

(b) Prepare journal entries to record the 2016 amortization expense.

3. ABC Company and XYZ Corporation are comparable size companies involved in the fashion business. Each company depreciates its plant assets using the straight-line method. Their financial statements reveal the following information.

	ABC Co.	XYZ Corp.
Net income	$ 800,000	$1,000,000
Sales revenue	1,300,000	1,180,000
Average total assets	2,500,000	2,000,000
Average plant assets	1,800,000	1,000,000

(a) For each company, calculate the asset turnover.

(b) Based on your calculations in part (a), comment on the relative effectiveness of the two companies in using their assets to generate sales and produce net income.