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 $1,600,000 on February 22 . The stand of timber is estimated at 5,000,000 board feet. During the current year, 1,100,000 board teet of timber were cut and sold. b. On December 31, the company determined that $3,750,000 of goodwill was impaired. c. Governmental and legal costs of $6,600,000 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, depietion, or impaiment for the current year for each of the foregoing items. 2. Jocimalize the adjusting entries required to record the amortization, depledion, or impairment for each item. CHART OF ACCOUNTS General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 610 Interest Revenue 112 Accounts Receivable 620 Gain on Sale of Vehicles 114 Interest Receivable 621 Gain on Sale of Equipment 115 Notes Receivable 622 Gain on Sale of Timber Rights 116 Merchandise Inventory 623 Gain from Sale of Goodwill 117 Supplies 119 Prepaid Insurance EXPENSES 120 Land 510 Cost of Merchandise Sold 123 Vehicles 520 Salaries Expense 124 Accumulated Depreciation-Vehicles 521 Advertising Expense 125 Equipment 522 Depreciation Expense-Vehicles 126 Accumulated Depreciation-Equipment 523 Delivery Expense 130 Timber Rights 524 Repairs and Maintenance Expense 131 Accumulated Depletion 529 Selling Expenses 132 Goodwill 531 Rent Expense 133 Patents 532 Depreciation Expense-Equipment 533 Depletion Expense Chart of Accounts 119 Prepaid Insurance EXPENSES 120 Land 510 Cost of Merchandise Sold 123 Vehicles 520 Salaries Expense 124 Accumulated Depreciation-Vehicles 521 Advertising Expense 125 Equipment 522 Depreciation Expense-Vehicles 126 Accumulated Depreciation-Equipment 523 Delivery Expense 130 Timber Rights 524 Repairs and Maintenance Expense 131 Accumulated Depletion 529 Selling Expenses 132 Goodwill 531 Rent Expense 133 Patents 532 Depreciation Expense-Equipment 533 Depletion Expense LIABILITIES 534 Amortization Expense-Patents 210 Accounts Payable 535 Insurance Expense 211 Salaries Payable 536 Supplies Expense 213 Sales Tax Payable 539 Miscellaneous Expense 214 Interest Payable 710 Interest Expense 215 Notes Payable 720 Loss on Sale of Vehicles 721 Loss on Sale of Equipment EQUITY 722 Loss on Sale of Timber Rights 310 Common Stock 723 Loss from Impaired Goodwill 311 Retained Earnings 312 Dividends 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. General voumal lithictons b. On December 31 , the compony determined that $3,750,000 of goochivir was impaired c. Govemmental and legal costs of $6,600,000 were incurred on April 3 in obraining a patent with an estimated economic ife of 12 yoars. Amortization is to be for three-fourths of a year
