Minicase 3: On December 31, 2006, the Mallory Corporation had the following activity in its fixed assets record. Assume all assets were purchased on January 1.
Equipment Cost Salvage Date Life Method of Depreciation
Machine 1 $65,000 $5,000 2002 5 DDB
Building #3 $900,000 not including land $50,000 2004 25 S/L
Mine 316 $1,000,000 $0 2003 1,000,000 tons 30,000 tons extracted
Mine 682 $500,000 $100,000 2001 40,000 barrels 6,000 barrels extracted
Patent $50,000 0 2004 17
Truck 1 $35,000 $3,000 2004 200,000 miles Units of production: total miles depreciated to date are 60,000 as of January 1, 2006. Miles this year 30,000
Truck 2 $50,000 $5,000 2006 150,000 miles Units of production, miles this year are 15,000
Truck 3 $75,000 $10,000 2001 200,000 miles Units of production: total miles depreciated to date are 180,000 as of January 1, 2006. Miles in 2006 are 30,000 miles.
Machine 2 $100,000 $5,000 2003 10 S/L
REQUIRED:
• Compute the depletion, amortization, and depreciation expense on December 31, 2006 for each asset listed above.
• Record the entries for the assets above
• Suppose that we sold machine 2 for $50,000, record the entry
• Suppose that the building life increased from 25 years to 30 years, revise the depreciation and prepare the entry.
• Suppose that the corporation spent $20,000 in 2006 to defend the patent. Record the entry.
Click here for the solution: On December 31, 2006, the Mallory Corporation had the following activity in its fixed assets record
