1. ACC 422 Week 4 WileyPLUS Assignment
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ACC 422 Week 4 WileyPLUS Assignment
Exercise 11-4
Wenner Furnace Corp. purchased machinery for
$650,070 on May 1, 2012. It is estimated that it will
have a useful life of 10 years, salvage value of
$34,950, production of 559,200 units, and working
hours of 25,000. During 2013, Wenner Corp. uses the
machinery for 2,650 hours, and the machinery
produces 59,415 units.
From the informationgiven, compute the
depreciation charge for 2013 under each of the
following methods. (Round answers to 0 decimal
places, e.g. $45,892.)
Problem 11-6
Conan O’BrienLogging and Lumber Company owns
2. 3,200 acres of timberland on the north side of Mount
Leno, which was purchased in 2000 at a cost of $640
per acre. In 2012, O’Brienbegan selectively logging
this timber tract. In May of 2012, Mount Leno
erupted, burying the timberland of O’Brien under a
foot of ash. All of the timber on the O’Brientract was
downed. In addition, the logging roads, built at a cost
of $159,000, were destroyed, as well as the logging
equipment, with a net book value of $323,200.
At the time of the eruption, O’Brienhad logged 20%
of the estimated 550,000 board feet of timber. Prior
to the eruption, O’Brienestimated the land to have a
value of $260 per acre after the timber was
harvested. O’Brien includes the logging roads in the
depletion base.
O’Brienestimates it will take 3 years to salvage the
downed timber at a cost of $707,400. The timber can
be sold for pulp wood at an estimated price of $3 per
board foot. The value of the land is unknown, but
must be considered nominal due to future
uncertainties.
(a) Determine the depletion cost per board foot for
the timber harvested prior to the eruption of Mount
Leno. (Round per unit answer to 2 decimal places,
e.g. 0.45.)
(b) Prepare the journal entry to record the depletion
prior to the eruption. (Round per unit answer to 2
3. decimal places, e.g. 0.45 for computational purpose
and final answer to 0 decimal places, e.g. $45,892. If
no entry is required, select "No entry" for the account
titles and enter 0 for the amounts. Credit account
titles are automatically indented when amount is
entered. Do not indent manually.)
(c) If this tract represents approximately half of the
timber holdings of O’Brien, determine the amount of
the extraordinary loss due to the eruption of Mount
Leno for the year ended December 31, 2012.
Exercise 12-16
Margaret Avery Company from time to time embarks
on a research program when a special project seems
to offer possibilities.In 2011, the company expends
$339,820 on a research project, but by the end of
2011 it is impossible to determine whether any
benefit will be derived from it.
(a) The project is completed in 2012, and a successful
patent is obtained. The R&D costs to complete the
project are $132,070. The administrative and legal
expenses incurred in obtaining patent number 472-
1001-84 in 2012 total $35,000. The patent has an
expected useful life of 5 years. Record these costs in
journal entry form. Also, record patent amortization
(full year) in 2012. (Credit account titles are
4. automatically indented when amount is entered. Do
not indent manually.)
(b) In 2013, the company successfully defends the
patent in extended litigationat a cost of $52,000,
thereby extending the patent life to December 31,
2020. What is the proper way to account for this
cost? Also, record patent amortization (full year) in
2013. (Credit account titles are automatically
indented when amount is entered. Do not indent
manually.)
Problem 12-1
Reichenbach Co., organized in 2011, has set up a
single account for all intangible assets. The following
summary discloses the debit entries that have been
recorded during 2012 and 2013.
Intangible Assets
7/1/12 8-year franchise; expirationdate
6/30/19 $57,520
10/1/12 Advance payment on laboratory space
(2-year lease) 25,320
12/31/12 Net loss for 2011 including state
incorporation fee, $1,560,
and related legal fees of organizing, $4,700 (all
fees incurred in 2011) 15,170
1/2/13 Patent purchased (10-year life) 88,020
3/1/13 Cost of developing a secret formula
5. (indefinite life) 71,390
4/1/13 Goodwill purchased (indefinite life)
279,860
6/1/13 Legal fee for successful defense of patent
purchased above 13,340
9/1/13 Research and development costs
154,400
Prepare the necessary entries to clear the Intangible
Assets account and to set up separate accounts for
distinct types of intangibles. Make the entries as of
December 31, 2013, recording any necessary
amortizationand reflecting all balances accurately as
of that date. (Ignore income tax effects.) (Credit
account titles are automatically indented when
amount is entered. Do not indent manually. Round all
answers to 0 decimal places, e.g. 8,564.)
