Problem:
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 track of land were purchased for $720,000 on July 11. The stand of timber is estimated a 2,250,000 board feet. During the current year, 600,000 board feet of timber were cut.
b. Goodwill in the amount of $10,000,000 was purchased on January 3.
c. Governmental and legal costs of $420,000 were incurred on October 2 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for one-fourth year.
1. Determine the amount of the amortization or depletion expense for the current year for each of the foregoing items.
2. Journalize the adjusting entries required to record the amortization or depletion for each item.