Problem 11–7
Requirement 1
Cost of mineral mine:
Depletion:
2019 depletion:
Depreciation:
Structures:
2019 depreciation:
Problem 11–7 (continued)
Equipment:
2019 depreciation:
Requirement 2
Mineral mine:
Cost $ 2,200,000
Less accumulated depletion:
Structures:
Cost $ 150,000
Less accumulated depreciation:
Equipment:
Cost $ 80,000
Less accumulated depreciation:
Problem 11–7 (concluded)
Requirement 3
Depletion of natural resources and depreciation of assets used in the extraction
of natural resources are part of product cost and are included in the cost of the
In 2018, since all of the ore was sold, all of 2018’s depletion and depreciation
Problem 11–8
Requirement 1
Calculation of goodwill:
Consideration exchanged $2,000,000
The cost of goodwill is not amortized.
To record amortization of patent.
To record amortization of franchise.
Problem 11–8 (concluded)
Requirement 2
Intangible assets:
Goodwill $300,000 [1]
[1] $300,000
Problem 11–9
Requirement 1
Machine 101:
Machine 102:
Machine 103:
Requirement 2
To record depreciation on machine 102 up to the date of sale.
March 31, 2018
…………………….Accumulated depreciation—equipment
Problem 11–9 (continued)
Requirement 3
Less accumulated depreciation:
Depreciation through 12/31/2017 $13,500
Depreciation from 1/1/2018 to
Requirement 4
To record sale of equipment.
March 31, 2018
Cash…………………………………………………………………….. 52,500
Problem 11–9 (concluded)
Requirement 5
Building:
Useful life of the building:
(2013–2017)
To record depreciation on the building.
To record depreciation on the equipment.
…………………….Accumulated depreciation—equipment
Equipment:
Problem 11–10
a. This is a change in estimate.
No entry is needed to record the change.
2018 journal entry:
………………………………………Accumulated depreciation
Calculation of annual depreciation after the estimate change:
Cost
Undepreciated cost
÷ 25 yrs.Estimated remaining life (25 years: 2018–2040)
A disclosure note should describe the effect of a change in estimate on income
from continuing operations, net income, and related per-share amounts for the
current period.