Reference no: EM132670104

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 $1,600,000 on February 22. The stand of timber is estimated at 5,000,000 board feet. During the current year, 1,100,000 board feet of timber were cut and sold.

B. On December 31, the company determined that $3,750,000 of goodwill was impaired.

C. Governmental and legal costs of $6,600,000 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.

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

Problem 2. Journalize the transactions and the adjusting entries on December 31. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 2 through 3 of the journal.

a. Timber rights on a tract of land were purchased for $1,600,000 on February 22. The stand of timber is estimated at 5,000,000 board feet. During the current year, 1,100,000 board feet of timber were cut and sold