On January 1, 2018, Dayton Mining Company purchased land containing an estimated 15 million tons of iron ore at a cost of $6,000,000. The land without the iron ore is estimated to be worth $600,000. The company expects to operate the mine for 10 years. Buildings costing $550,000 are constructed on the site and are expected to last for 25 years. Equipment costing $350,000 with an estimated life of 12 years is installed. When the mine is closed, the buildings and the equipment possess residual value of $50,000 and $30,000 respectively. Straight-line method is used for depreciation of buildings, and double-declining method for depreciation of equipment. An estimated life of 10 years is adopted for both items. During the first two year of operations, Dayton extracted and sold 2 million tons of ore in each year. (a) Determine the depreciation or depletion expenses for land, buildings, equipment and iron ore mine in 2018 and 2019. Show your computations if applicable. (b) On January 1, 2018, Dayton also purchased a patent for $2,500,000 and a franchise from Iron Drill Company for $400,000. The patent's legal life is 20 years but the company estimated that the patent's useful life would only be 5 years from the date of acquisition. The franchise is for an indefinite time period and gives Dayton the exclusive rights to sell Iron Drill's products in a particular territory. Apart from the aforesaid purchases, Dayton also incurred research costs of $500,000 on December 31, 2018 in developing a new product Required: Explain how Dayton should recognise the above items. Where applicable, show the respective accounting entries for 2018 and 2019