Natural Resource and Intangible Accounting

McLeansboro Oil Company acquired a small oil company with only three assets during a recent year. The assets were acquired for $$1,350,000$ cash.

Asset Fair Value Expected Life

Oil $$1,125,00055,000$ barrels

Land $78,000$ Indefinite

Equipment $62,000550,000$ barrels

Required:

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$1.$ Prepare the entry to record this acquisition in McLeansboro's journal. $($Hint: Record the cost in excess of fair value as goodwill.$)$ If an amount box does not require an entry, leave it blank.

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$2.$ If McLeansboro pumps and sells $11,000$ barrels of oil in $1$ year, compute the amount of depletion. Do not round intermediate calculations.

$fill in the blank $92$e$4$f$5014$ff$7$fbf$\_1$

$537\mathrm{.}77$

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$3.$ Prepare journal entries to record depletion for the $11,000$ barrels of oil pumped and sold. First record depletion and then record the sale of the oil. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations.

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$4.$ Conceptual Connection: Is the goodwill amortized?

Yes