For Each of the Following Unrelated Transactions, (A) Determine the Amount

question 186

Essay

For each of the following unrelated transactions, (a) determine the amount of the amortization or depletion expense for the current year, and (b) present the adjusting entries required to record each expense at year end.
(1) Timber rights were purchased on a tract of land for $480,000. The timber is estimated at 1,200,000 board feet. During the current year, 75,000 board feet of timber were cut and sold.
(2) Costs of $8,000 were incurred on January 1 to obtain a patent. Shortly thereafter, $22,000 was spent in legal costs to successfully defend the patent against competitors. The patent has an estimated legal life of 12 years.

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Definitions:

Brightness Contrast

The effect of surrounding brightness levels on the perception of the brightness of an object, where the same object may appear different under different lighting conditions.

Lightness Constancy

The ability to perceive the color (or lightness) of an object as constant under varying lighting conditions.

Brightest

Having the most light or luminosity; often used metaphorically to describe highly intelligent or clever individuals.

Brightness Contrast

The appearance of a differently illuminated areas in the field of vision, resulting in the perception of varying levels of light intensity.