Solution-Compute the depletion and depreciation expense

Compute the depletion and depreciation expense

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Reference no: EM131779700

Minicase: On December 31, 2006, the Mallory Corporation had the following activity in its fixed assets record. Assume all assets were purchased on January 1.

Equipment	Cost	Salvage	Date	Life	Method of Depreciation
Machine 1	$65,000	$5,000	2002	5	DDB
Building #3	$900,000 not including land	$50,000	2004	25	S/L
Mine 316	$1,000,000	$0	2003	1,000,000 tons	30,000 tons extracted
Mine 682	$500,000	$100,000	2001	40,000 barrels	6,000 barrels extracted
Patent	$50,000	0	2004	17
Truck 1	$35,000	$3,000	2004	200,000 miles	Units of production: total miles depreciated to date are 60,000 as of January 1, 2006. Miles this year 30,000
Truck 2	$50,000	$5,000	2006	150,000 miles	Units of production, miles this year are 15,000
Truck 3	$75,000	$10,000	2001	200,000 miles	Units of production: total miles depreciated to date are 180,000 as of January 1, 2006. Miles in 2006 are 30,000 miles.
Machine 2	$100,000	$5,000	2003	10	S/L

REQUIRED:

Compute the depletion, amortization, and depreciation expense on December 31, 2006 for each asset listed above.
Record the entries for the assets above
Suppose that we sold machine 2 for $50,000, record the entry
Suppose that the building life increased from 25 years to 30 years, revise the depreciation and prepare the entry.
Suppose that the corporation spent $20,000 in 2006 to defend the patent. Record the entry.

Reference no: EM131779700

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Compute the depletion and depreciation expense

Reference no: EM131779700

Reference no: EM131779700

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