During the current year, Rothchild, Inc., purchased two assets that are described as follows:

Heavy Equipment

Purchase price, $275,000.

Expected to be used for 10 years, with a residual value at the end of that time of $50,000.

Expenditures required to recondition the equipment and prepare it for use, $75,000.

Patent

Purchase price, $75,000.

Expected to be used for five years, with no value at the end of that time.

Rothchild depreciates heavy equipment by the declining-balance method at 150 percent of the straight-line rate. It amortizes intangible assets by the straight-line method. At the end of two years, because of changes in Rothchilds core business, it sold the patent to a competitor for $30,000.

a.	Compute the amount of depreciation expense on the heavy equipment for each of the first three years of the assets life. (Round your answers to the nearest dollar amount.)

	Year 1	Year 2	Year 3
Depreciation Expense

b.

Compute the amount of amortization on the patent for each of the two years it was owned by Rothchild.

	Year 1	Year 2
Amount of Amortization

c-1.	Prepare the plant and intangible assets section of Rothchilds balance sheet at the end of the first and second years. (Amounts to be deducted should be indicated by a minus sign.)

C-1. Prepare the plant and intangible assets section of Rothchild's balance sheet at the end of the first and second years. (Amounts to be deducted should be indicated by a minus sign.) ROTHCHILD, INC., Balance Sheet (Partial) At the End of Year 1 Equipment Patent $ 305,000 66 000 $ 371,000 Total plant and intangible assets $ 371,000 ROTHCHILD, INC., Balance Sheet (Partial) At the End of Year 2 Total plant and intangible assets s o C-2. Calculate the amount of the gain or loss on the patent that would be included in the second years income statement