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 $1,406,160 on February 22. The stand of timber is estimated at 5,859,000 board feet. During the current year, 1,145,800 board feet of timber were cut and sold.
B.	On December 31, the company determined that $3,522,000 of goodwill was impaired.
C.	Governmental and legal costs of $7,194,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 10 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 ACCOUNTS

General 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

313 Income Summary

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 $1,406,160 on February 22. The stand of timber is estimated at 5,859,000 board feet. During the current year, 1,145,800 board feet of timber were cut and sold.

How does grading work?

PAGE 1

JOURNAL

ACCOUNTING EQUATION

Score: 4/25

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
2
3

Points:

0.8 / 5

b. On December 31, the company determined that $3,522,000 of goodwill was impaired.

Question not attempted.

PAGE 2

JOURNAL

ACCOUNTING EQUATION

Score: 0/25

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
2
3

Points:

0 / 5

c. Governmental and legal costs of $7,194,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for three-fourths of a year.

Question not attempted.

PAGE 3

JOURNAL

ACCOUNTING EQUATION

Score: 0/25

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
2
3