1. Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $21,330....

1. Depreciation by Three Methods; Partial Years

Perdue Company purchased equipment on April 1 for $21,330. The equipment was expected to have a useful life of three years, or 3,780 operating hours, and a residual value of $540. The equipment was used for 700 hours during Year 1, 1,300 hours in Year 2, 1,100 hours in Year 3, and 680 hours in Year 4.

Required:

Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

a. Straight-line method

Year	Amount
Year 1	$fill in the blank 1
Year 2	$fill in the blank 2
Year 3	$fill in the blank 3
Year 4	$fill in the blank 4

b. Units-of-activity method

Year	Amount
Year 1	$fill in the blank 5
Year 2	$fill in the blank 6
Year 3	$fill in the blank 7
Year 4	$fill in the blank 8

c. Double-declining-balance method

Year	Amount
Year 1	$fill in the blank 9
Year 2	$fill in the blank 10
Year 3	$fill in the blank 11
Year 4	$fill in the blank 12

2. Amortization Entries

Kleen Company acquired patent rights on January 10 of Year 1 for $464,000. The patent has a useful life equal to its legal life of eight years. On January 7 of Year 4, Kleen successfully defended the patent in a lawsuit at a cost of $23,000.

If required, round your answers to the nearest dollar.

a. Determine the patent amortization expense for Year 4 ended December 31.
$fill in the blank 98a34205207505f_1

Feedback

For intangible assets with finite lives, a company uses the straight-line method to calculate amortization. If a company successfully defends a patent it becomes part of the cost of the patent. If the company loses a lawsuit regarding a patent infringement, then the patent is written off.

b. Journalize the adjusting entry on December 31 of Year 4 to recognize the amortization. If an amount box does not require an entry, leave it blank.

	Amortization Expense-Patents	fill in the blank c0f86e050feefc2_2	fill in the blank c0f86e050feefc2_3
	Patents	fill in the blank c0f86e050feefc2_5	fill in the blank c0f86e050feefc2_6

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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