Instructions 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 feet 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, 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. $ . S C s OT Accoun 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 115 Notes Receivable 621 Gain on Sale of Equipment 622 Gain on Sale of Timber Rights 623 Gain from Sale of Goodwill 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance EXPENSES 120 Land 510 Cost of Merchandise Sold 123 Vehicles 520 Salaries Expense 124 Accumulated Depreciation-Vehicles 125 Equipment 126 Accumulated Depreciation Equipment 130 Timber Rights 131 Accumulated Depletion 521 Advertising Expense 522 Depreciation Expense-Vehicles 523 Delivery Expense 524 Repairs and Maintenance Expense 529 Selling Expenses -hart of Accounts 126 Accumulated Depreciation-Equipment 523 Delivery Expense 130 Timber Rights 524 Repairs and Maintenance Expense 131 Accumulated Depletion 529 Selling Expenses 531 Rent Expense 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 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 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 2 Journalize the transactions and the acjusting entries on December 31. Refer to the Chart of Accounts for exact wprcing of account tilos Scroll down to access pages 2 through 3 of the journal. a Timber rights on a tract of land were purchased for $1,600,000 on February 22. The stand or smber s estimated at 5,000,000 board het. During the current year. 1.100.000 board feet of timber were cut and sold PAGES JOURNAL ACCOUNTING EQUATION DET POST. REF CREDIT ASSETS BILMES EQUITY DATE DESCRIPTION Adjusting Entries b. On December 31, the company determined that $3,750,000 of goodwill was impared PAGE 2 JOURNAL ACCOUNTING EQUATION DATE POST. REF DEBIT CREDIT LABUTIES EQUITY DESCRIPTION Adjusting Entries 1 cGovernmental and legal costs of 56,600,000 were incurred on April 3 in obtaining a stent with an estimated economic We of 12 years. Amortization is to be for three-fourths of a year PAGE JOURNAL ACCOUNTING EQUATION DATE POSTRE DENT CREDIT ASSETS Liaus TOUTY DESCRIPTION Adjusting Entries 1 7 3
