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 Rothchild's 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 asset's life.

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

C. Prepare the plant and intanglinble assets section of Rothchild's balance sheet at the end of the first and second years. Also, calculate the amount of the gain or loss on the patent that would be included in the second years income statement.

Please select the proper format from below as an example of how it should be prepared and use that as a template of how it should look:

a. (1) Straight-Line Schedule
				Depreciation Expense		Accumulated Depreciation		Book
	Year	Computation						Value
	2015	$35,000 x 1/5		$7,000		$7,000		$ 33,000
	2016	35,000 x 1/5		7,000		14,000		26,000
	2017	35,000 x 1/5		7,000		21,000		19,000
	2018	35,000 x 1/5		7,000		28,000		12,000
	2019	35,000 x 1/5		7,000		35,000		5,000
(2) 200% Declining-Balance Schedule
				Depreciation Expense		Accumulated		Book
	Year	Computation				Depreciation		Value
	2015	$40,000 x 40%		$16,000		$16,000		$ 24,000
	2016	24,000 x 40%		9,600		25,600		14,400
	2017	14,400 x 40%		5,760		31,360		8,640
	2018	8,640 x 40%		3,456		34,816		5,184
	2019	$5,184 $5,000		184		35,000		5,000
(3) 150% Declining-Balance Schedule
				Depreciation Expense		Accumulated		Book
	Year	Computation				Depreciation		Value
	2015	$40,000 x 30%		$12,000		$12,000		$ 28,000
	2016	28,000 x 30%		8,400		20,400		19,600
	2017	19,600 x 30%		5,880		26,280		13,720
	2018*	($13,720 $5,000) 2 yrs.		4,360		30,640		9,360
	2019*	($13,720 $5,000) 2 yrs.		4,360		35,000		5,000
	* Switch to straight-line