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

question 222

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 $360,000. 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 $14,000 were incurred on January 1 to obtain a patent. Shortly thereafter, $28,000 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:

Hispanic-Owned Businesses

Enterprises owned and operated by individuals of Hispanic heritage, contributing to the economic diversity and development.

Annual Revenue

The total amount of income generated by a company from its activities over a year before any costs or expenses are deducted.

Crediting Purposes

The act of acknowledging someone's contribution or work, often for the purpose of assigning merit or recognition.

Employees

Individuals who work for a business or organization and typically receive compensation in the form of wages or salary.