Minicase 3: The Mallory Corporation

$10.00

 

Minicase 3

 

The Mallory Corporation

On December 31, 2006, the Mallory Corporation had the following activity in its fixed assets record.

 
  MALLORY CORPORATION – FIXED ASSETS
  Equipment Cost Salvage Life Method of Depreciation
  Machine 1 $65,000 $5,000 5 DDB purchased 1/1/2006
  Building #3 $900,000 not including land $50,000 25 S/L purchased 6/30/2006
  Mine 316 $1,000,000 $0 1,000,000 tons 30,000 tons extracted. Mine purchased 1/1/2006
  Patent $50,000 0 17  Purchased 1/1/2006
  Truck 1 $35,000 $3,000 200,000 miles Units of production: total miles depreciated to date are 60,000 as of January 1, 2006. Miles this year 30,000
 
 
REQUIRED:

 

·         Compute the depletion, amortization, and depreciation expense on December 31, 2006 for each asset listed above

·         Record the depreciation journal entries for the assets above

·         Suppose that Machine 1 was sold for $40,000 on 12/31/2008, record the entry

·         Suppose that the corporation spent $20,000 in 2006 to defend the patent. Record the entry.

·         Financial Reporting on Fixed Assets:

§  Prepare a partial balance sheet statement for Mallory Corporation showing Fixed and Intangible assets

 

 

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