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Part 1: Glick Company purchased oil rights on July 1, Year 1 for $3,080,000. A total of 200,000 barrels of oil are expected to be

Part 1:

Glick Company purchased oil rights on July 1, Year 1 for $3,080,000. A total of 200,000 barrels of oil are expected to be extracted over the assets life, and 64,000 barrels are extracted and sold in Year 1. Which of the following correctly summarizes the effect of the Year 1 depletion expense on the elements of the financial statements? (Do not round intermediate calculations.):

  • A decrease in stockholders equity of $200,000.

  • A decrease in assets of $640,000.

  • A decrease in assets of $985,600.

  • An increase in stockholders equity of $1,025,600.

Part 2:

The balance sheet of Flo's Restaurant showed total assets of $600,000, liabilities of $200,000 and stockholders equity of $400,000. An appraiser estimated the fair value of the restaurant assets at $715,000. If Alice Company pays $985,000 cash for the restaurant, what is the amount of goodwill?

  • $270,000

  • $385,000

  • $535,000

  • $470,000

Part 3:

On January 1, Year 1, Stiller Company paid $168,000 to obtain a patent. Stiller expected to use the patent for 5 years before it became technologically obsolete. The remaining legal life of the patent was 8 years. Based on this information, what is the amount of amortization expense during Year 3 and the book value of the patent as of December 31, Year 3, respectively?

  • $21,000 and $63,000

  • $33,600 and $67,200

  • $21,000 and $105,000

  • $33,600 and $100,800

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