Minicase 3 The Mallory Corporation

On December 31, 2006, the Mallory Corporation had the following activity

in its fixed assets record.

MALLORY

CORPORA

TION FIXED

ASSETS

Equipment Cost Salvage Life Machine 1 $65,000 $5,000 5 Building #3 $50,000 25 Mine 316 $900,000 not

including land

$1,000,000 $0 1,000,000 tons Patent $50,000 0 17 Truck 1 $35,000 $3,000 200,000 miles Method of

Depreciation

DDB

purchased

1/1/2006

S/L purchased

6/30/2006

30,000 tons

extracted. Mine

purchased

1/1/2006

Purchased

1/1/2006

Units of

production:

total miles

depreciated to

date are 60,000

as of January 1,

2006. Miles

this year

30,000 REQUIRED: Compute the depletion, amortization, and depreciation expense on December 31, 2006 for each asset listed above

Record the depreciation journal entries for the assets above

Suppose that Machine 1 was sold for $40,000 on 12/31/2008, record the entry

Suppose that the corporation spent $20,000 in 2006 to defend the patent. Record the entry.

Financial Reporting on Fixed Assets: Prepare a partial balance sheet statement for Mallory Corporation showing Fixed and Intangible assets