51. Barton Corporation acquires a coal mine at a cost of $1,500,000. Intangible

Question

51. Barton Corporation acquires a coal mine at a cost of $1,500,000. Intangible development costs total $360,000. After extraction has occurred, Barton must restore the property (estimated fair value of the obligation is $180,000), after which it can be sold for $510,000. Barton estimates that 5,000 tons of coal can be extracted. If 900 tons are extracted the first year, which of the following would be included in the journal entry to record depletion? a. Debit to Accumulated Depletion for $275,400 b. Debit to Inventory for $275,400 c. Credit to Inventory for $270,000 d. Credit to Accumulated Depletion for $459,000 52. Companies should test indefinite life intangible assets at least annually for a. recoverability b. amortization c. impairment. d. estimated useful life. 53. Goodwill may be recorded when a. it is identified within a company b. one company acquires another in a business combination. c. the fair value of a company's assets exceeds their cost. d. a company has exceptional customer relations. 54. When the purchaser in a business combination pays less than the fair value of the identifiable net assets, such a situation is referred to as a: a. goodwill purchase b. bargain purchase. c. residual purchase d. blanket purchase. 55. Which of the following is an intangible assett? a. Land b. Equipment c. Research and Development Cost d. Copyright se the information for 56 and 57 seller. Legal fees of $1,000 were paid related to the acquisition. 56. What amount should be debited to the patent account? a. $1,000 b. $44,000 c. $45,000 d. $46,000 12

Explanation / Answer

Answer 51 - Debit to Inventory for $ 2,75,400

( $ 15,00,000 + $ 360000 + $ 180000 - $ 510000 )/5000 Tons = $ 306

900 Tons x $ 306 = $ 275400

Answer 52 - (b) Amortization

Answer 53 - (b) One company acquires another in a business combination

Answer 54 - (b) Bargain Purchase

Answer 55 - (d) Copy Right

Answer 56 - (d) $ 46,000

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