Question

Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:

Answer 1

Solution:

Given :

Timber rights were purchased for = $1,600,000

The stand of the timber is = 5,000,000 board feet

Goodwill impaired by the company = $3,750,000

Timber cut and sold during current year = 1,100,000 board feet

Government legal cost = $6,600,000

Therefore the amount of amortization , depletion and the impairment of the current year for each foregoing item are :

1.

Item     Impairment, Amortization or the depletion

a).         $ 352,000

b).         $ 3,750,000

c).         $ 412,500

2. Jornalizing the entries that required to record the depletion, amortization or the impairment of each of the items are :

a). The depletion expense = $ 352,000

     Accumulated expense = $ 352,000

b). Loss from the impaired goodwill = $3,750,000

    The goodwill = $3,750,000

c). Amortization expenses patent= $412500

   Patent = $412500