B. Medard Co. purchased equipment in January of 2013 for $90,000. The equipment was being depreciated on the straight-line method over an estimated useful life of 20 years, with no residual value. At the beginning of 2023, when the equipment had been in use for 10 years, the company paid $15,000 to overhaul the equipment. As a result of this improvement, the company estimated that the useful life of the equipment would be extended an additional 5 years. What should be the depreciation expense recorded for this equipment in 2023? C. In January, 2023, Demba Corporation purchased a mineral mine for $3,400,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of $200,000 after the ore has been extracted. The company incurred $1,000,000 of development costs preparing the mine for production. During 2023, 500,000 tons were removed and 400,000 tons were sold. What is the amount of depletion that Demba should expense for 2023? D. Zebra Company purchases Glow Inc. for $13,985,000 cash on January 1, 2023. The book value of Glow Inc. net assets reported on its December 31, 2022 statement of financial position was $12,620,000. Zebra’s December 31, 2022 analysis indicated that the fair value of Glow’s tangible assets exceeded the book value by $560,000, and the fair value of identifiable intangible assets exceeded book value by $245,000. How much goodwill should be recognized by Zebra Company when recording the purchase of Glow Inc.? E. Virtual Co. incurred research and development costs in 2023 as follows: Materials used in research and development projects $ 450,000 Equipment acquired that will have alternate future uses in future research and development projects 3,000,000 Depreciation for 2023 on above equipment 300,000 Personnel costs of persons involved in research and development projects 750,000 Consulting fees paid to outsiders for research and development projects 300,000 Indirect costs reasonably allocable to research and development projects 225,000 Total $5,025,000 Assume economic viability has not been achieved. What amount of research and development costs should be charged to Virtual’s 2023 income statement? F. On January 1, 2019, MLW Company purchased a copyright for $1,000,000, having an estimated useful life of 16 years. In January 2023, MLW paid $150,000 for legal fees in a successful defense of the copyright. What should be the amount of copyright amortization expense for the year ended December 31, 2023?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
B. Medard Co. purchased equipment in January of 2013 for $90,000. The equipment was being
C. In January, 2023, Demba Corporation purchased a mineral mine for $3,400,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of $200,000 after the ore has been extracted. The company incurred $1,000,000 of development costs preparing the mine for production. During 2023, 500,000 tons were removed and 400,000 tons were sold. What is the amount of depletion that Demba should expense for 2023?
D. Zebra Company purchases Glow Inc. for $13,985,000 cash on January 1, 2023. The book value of Glow Inc. net assets reported on its December 31, 2022
E.
Virtual Co. incurred research and development costs in 2023 as follows:
|
Materials used in research and development projects |
$ 450,000 |
|
Equipment acquired that will have alternate future uses in future research and development projects |
3,000,000 |
|
Depreciation for 2023 on above equipment |
300,000 |
|
Personnel costs of persons involved in research and development projects |
750,000 |
|
Consulting fees paid to outsiders for research and development projects |
300,000 |
|
Indirect costs reasonably allocable to research and development projects |
225,000 |
|
Total |
$5,025,000 |
Assume economic viability has not been achieved.
What amount of research and development costs should be charged to Virtual’s 2023 income statement?
F.
On January 1, 2019, MLW Company purchased a copyright for $1,000,000, having an estimated useful life of 16 years. In January 2023, MLW paid $150,000 for legal fees in a successful defense of the copyright.
What should be the amount of copyright amortization expense for the year ended December 31, 2023?
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