Explore BrainMass
Share

# Amortization/Depreciation

Hi

I need step by step instructions on how to solve the following questions. The textbook is not as clear on the topics as I had hoped. Please give detailed explanations so that the concept is clear. Thanks.

Question 1

In 2010, CopperCo Corporation purchased a mine for \$200 million (\$30 million were applicable to the land). An independent evaluation estimated the mine's reserves at 7.5 million tons. In 2010, CopperCo extracted 0.9 million tons.

Instructions: Calculate the company's depletion expense for 2010.

Question 2
a. In 2011, McLane Company exchanged equipment for two delivery trucks. The equipment had been purchased for \$110,000 ten years ago and has since been fully depreciated. While the equipment was recently appraised at \$19,000, a reliable valuation for the trucks was not available. Assume the transaction has commercial substance.

Instructions: Prepare the required entr(ies) to record the exchange.

b. Beringer Co. has a computer that cost \$106,000 on March 20, 2006. This old computer had an estimated life of ten years and a residual value of \$6,000. On December 23, 2010, the old computer is exchanged for a similar computer with a market value of \$58,000. Beringer also received \$6,000 cash. Assume that the last fiscal period ended on December 31, 2009, that straight-line depreciation is used, and that the transaction does not have commercial substance.

Instructions
Prepare all entries that are necessary on December 23, 2010.

Question 3
Brokaw Corporation's balance sheet includes the following asset:
Equipment \$110,000
Less: Accumulated depreciation: (20,000)
Carrying amount \$90,000
After performing its annual review for impairment, Brokaw obtains the following data:
Asset value in use: \$64,000
Fair value less selling costs: \$67,000

Instructions:

Assuming Brokaw uses the rational entity impairment model,
1. Calculate the recoverable amount.
2. Calculate the impairment loss.
3. Prepare the entry to record the impairment loss

#### Solution Summary

The expert examines amortization and depreciation.

\$2.19