Determine the amortization rate

Prager, Inc., acquired a mine for $870,000 at the beginning of the year. Of the total purchase price, $100,000 was allocated to the land while the remainder was allocated to the minerals in the mine itself. Prager estimates that 15,400,000 tons of ore are in the mine. During the year, Prager mined 2,500,000 tons of ore and sold 2,000,000 tons. During the year, Prager spent $240,000 developing a new process that resulted in a patent. On July 1, Prager obtained the patent, which has a useful life of eight years. The legal and filing fees associated with the patent totaled $32,000.

A. Determine the amortization rate per year and depletion rate per ton.

Don't use plagiarized sources. Get Your Custom Essay on
Determine the amortization rate
Just from $13/Page
Order Essay

B. What is the amortization expense for the year?

C. What is total depletion for the year?

D. What is the total depletion charged to cost of goods sold for the year?

McKain, Inc., closes its books on October 31 and prepares depreciation adjustments annually. On July 27, 2010, McKain sold some equipment with an original cost of $36,250 for $18,500. The equipment was purchased on November 4, 2005, and was depreciated using the straight-line method and had an estimated useful life of eight years and a salvage value of $1,650.

Prepare the entries to update the depreciation and record the sale of the equipment.

 

Place Order
Grab A 14% Discount on This Paper
Pages (550 words)
Approximate price: -
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Try it now!

Grab A 14% Discount on This Paper

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.