Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows A On December 31, the company determined that $3,400,000 of goodwill was impaired B Governmental and legal costs of $4,800,000 were incurred on September 30 in obtaining a patent with an estimated economic life of eight years Amortization is to be for one fourth year C Timber rights on a tract of land were purchased for $2,975,000 on February 4 The stand of timber is estimated at 12,500,000 board feet During the current year, 4,150,000 board feet of timber were cut and sold 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 to record the amortization, depletion, or impairment for each item Refer to the Chart of Accounts for exact wording of account titles Starting questions 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 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 Owner, Capital 311 Owner, Drawing 312 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 Journal 2 Journalize the transactions and the adjusting entries Refer to the Chart of Accounts for exact wording of account titles Scroll down to access pages 2 through 3 of the journal A On December 31, the company determined that $3,400,000 of goodwill was impaired PAGE 1 JOURNAL DATE DESCRIPTION POST REF DEBIT CREDIT 1 Adjusting Entries 2 3 B Governmental and legal costs of $4,800,000 were incurred on September 30 in obtaining a patent with an estimated economic life of eight years Amortization is to be for one fourth year PAGE 2 JOURNAL DATE DESCRIPTION POST REF DEBIT CREDIT 1 Adjusting Entries 2 3 C Timber rights on a tract of land were purchased for $2,975,000 on February 4 The stand of timber is estimated at 12,500,000 board feet During the current year, 4,150,000 board feet of timber were cut and sold PAGE 3 JOURNAL DATE DESCRIPTION POST REF DEBIT CREDIT 1 Adjusting Entries 2 3

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Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows: A. On December 31,

Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:

A.	On December 31, the company determined that $3,400,000 of goodwill was impaired.
B.	Governmental and legal costs of $4,800,000 were incurred on September 30 in obtaining a patent with an estimated economic life of eight years. Amortization is to be for one-fourth year.
C.	Timber rights on a tract of land were purchased for $2,975,000 on February 4. The stand of timber is estimated at 12,500,000 board feet. During the current year, 4,150,000 board feet of timber were cut and sold.

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 to record the amortization, depletion, or impairment for each item. Refer to the Chart of Accounts for exact wording of account titles.

Starting questions

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

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	Owner, Capital
311	Owner, Drawing
312	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

Journal

2. Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 2 through 3 of the journal.

A. On December 31, the company determined that $3,400,000 of goodwill was impaired.

PAGE 1

JOURNAL

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

B. Governmental and legal costs of $4,800,000 were incurred on September 30 in obtaining a patent with an estimated economic life of eight years. Amortization is to be for one-fourth year.

PAGE 2

JOURNAL

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

C. Timber rights on a tract of land were purchased for $2,975,000 on February 4. The stand of timber is estimated at 12,500,000 board feet. During the current year, 4,150,000 board feet of timber were cut and sold.

PAGE 3

JOURNAL