Record the entries for the assets above

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Reference no: EM131763340

Mini Case: 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: EM131763340

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