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Natural Resources, Patents, Goodwill chap 9(1).docx

Natural Resources, Patents, Goodwill chap 9(1).docx -...

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Natural Resources, Patents, Impairment of Goodwill 1. You paid $500,000 for a mineral deposit. The residual value is zero and you estimate there are 250,000 tons of minerals in the deposit. Use the units-of-production to deplete the mineral deposit. $500,000/250,000 tons = $2 depletion per ton Take out and sell 5000 tons of minerals 5000 tons X $2 = $10,000 depletion expense Date Accounts Debit Credit Date Depletion expense 10,000 Accumulated depletion 10,000 2. Purchase a patent for $25,000 and you estimate the useful life will be 10 years. Use the straight- line method for the amortization expense. $25,000/10 years = $2,500 amortization per year Date Accounts Debit Credit Date Amortization expense 2,500 Patents 2,500 3. Goodwill is the price paid for a business over the market value of its net assets.
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