Revision of Depreciation A building with a cost of $540,000 has an estimated residual value of $108,000, has an estimated useful life of 27 years, and is depreciated by the straight-line method. a. What is the amount of the annual depreciation? $ 16,000 b. What is the book value at the end of the fifteenth year of use? $ 380,000 X c. If at the start of the sixteenth year it is estimated that the remaining life is 15 years and that the residual value is $30,000, what is the depreciation expense for each of the remaining 15 years? $ 35,000 X Capital Expenditure and Depreciation; Parital-Year Depreciation Willow Creek Company purchased and installed carpet in its new general offices on September 30 for a total cost of $10,944. The carpet is estimated to have a 12-year useful life and no residual value. a. Prepare the journal entry necessary for recording the purchase of the new carpet. September 30 Carpet 10,944 Cash 10,944 Feedback Check My Work Is this purchase improving or extending the life of the asset? Or is this purchase something that will only benefit this period? b. Record the December 31 adjusting entry for the partial-year depreciation expense for the carpet, assuming that Willow Creek uses the straight-line method. Do not round intermediate calculations. Dec. 31 Accumulated Depreciation x 912 x Accumulated Depreciation-Carpet 608 x Amortization and Depletion Entries 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 $1,190,000 on February 22. The stand of timber is estimated at 8,500,000 board feet. During the current year, 2,300,000 board feet of timber were cut and sold. b. On December 31, the company determined that $940,000 of goodwill was impaired. C. Governmental and legal costs of $7,728,000 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. Do not round your intermediate calculation. Item Impairment, Amortization or Depletion Expense a. $ 2,300,000 X b. 322,000 X C. $ 940,000 X 2. Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item. Depletion Expense a. 322,000 Accumulated Depletion 322,000 b. Loss on Impairment of Goodwill 940,000 Goodwill 940,000 Amortization Expense-Patents C. Patents
