Chapter 3
Long-Term Assets
125
AP-10B (
6
)
Higgins Company purchased a patent from Marquette Limited for $283,000 on August 1,
2015. The patent has a remaining life of six years.
Required
a) Prepare the journal entry to record the purchase.
Date
Account Title and Explanation
Debit
Credit
b) Prepare the journal entry to record amortization for one year on July 31, 2016. The
company does not use the half‐year rule.
Date
Account Title and Explanation
Debit
Credit
AP-11B (
5
)
On March 1, 2016, Bowser Mining purchased an ore mine for $3,000,000. The company
expects to use the mine for five years and expects to extract 100,000 tons of ore over that
time. At the end of five years, the residual value is estimated to be $500,000. For the year
ended December 31, 2016, the company extracted 16,000 tons of ore. Prepare the journal
entry to record the depletion for 2016.
Date
Account Title and Explanation
Debit
Credit
