Reference no: EM132709516

Problem - Amortization and depletion entries

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

a. On December 31, Gemini Company determined that $3,000,000 of goodwill was impaired.

b. Governmental and legal costs of $920,000 were incurred by Gemini Company on June 30 in obtaining a patent with an estimated economic life of eight years. Amortization is to be for one-half year.

c. Timber rights on a tract of land were purchased for $1,350,000 on March 6. The stand of timber is estimated at 15,000,000 board feet. During the current year, 3,300,000 board feet of timber were cut and sold.

Instructions -

1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.

2. Illustrate the effects on the accounts and financial statements of the adjustments for each item.