Solved by verified expert :Conan O’Brien Logging and Lumber Company owns 4,100 acres of timberland on the north side of Mount Leno, which was purchased in 2000 at a cost of $600 per acre. In 2012, O’Brien began selectively logging this timber tract. In May of 2012, Mount Leno erupted, burying the timberland of O’Brien under a foot of ash. All of the timber on the O’Brien tract was downed. In addition, the logging roads, built at a cost of $155,000, were destroyed, as well as the logging equipment, with a net book value of $314,500.At the time of the eruption, O’Brien had logged 20% of the estimated 520,000 board feet of timber. Prior to the eruption, O’Brien estimated the land to have a value of $220 per acre after the timber was harvested. O’Brien includes the logging roads in the depletion base.O’Brien estimates it will take 3 years to salvage the downed timber at a cost of $733,600. The timber can be sold for pulp wood at an estimated price of $3 per board foot. The value of the land is unknown, but must be considered nominal due to future uncertainties.(a) Determine the depletion cost per board foot for the timber harvested prior to the eruption of Mount Leno. (Round per unit answer to 2 decimal places, e.g. 0.45.)Depletion cost per board foot $ (b) Prepare the journal entry to record the depletion prior to the eruption. (Round per unit answer to 2 decimal places, e.g. 0.45 for computational purpose and final answer to 0 decimal places, e.g. $45,892. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and Explanation Debit Credit(c) If this tract represents approximately half of the timber holdings of O’Brien, determine the amount of the extraordinary loss due to the eruption of Mount Leno for the year ended December 31, 2012.Extraordinary loss due to the eruption of Mount Leno $Question 3Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2011, the company expends $325,700 on a research project, but by the end of 2011 it is impossible to determine whether any benefit will be derived from it.(a) The project is completed in 2012, and a successful patent is obtained. The R&D costs to complete the project are $126,960. The administrative and legal expenses incurred in obtaining patent number(NNN) NNN-NNNN84 in 2012 total $27,600. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2012. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and Explanation Debit Credit(To record research and development costs)(To record legal and administrative costs)(To record one year’s amortization expense)(b) In 2013, the company successfully defends the patent in extended litigation at a cost of $54,000, thereby extending the patent life to December 31, 2020. What is the proper way to account for this cost? Also, record patent amortization (full year) in 2013. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and Explanation Debit Credit(To record legal cost of successfully defending patent) (To record one year’s amortization)Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2011, the company expends $325,700 on a research project, but by the end of 2011 it is impossible to determine whether any benefit will be derived from it.(a) The project is completed in 2012, and a successful patent is obtained. The R&D costs to complete the project are $126,960. The administrative and legal expenses incurred in obtaining patent number(NNN) NNN-NNNN84 in 2012 total $27,600. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2012. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and ExplanationDebitCredit(To record research and development costs)(To record legal and administrative costs)(To record one year’s amortization expense)(b) In 2013, the company successfully defends the patent in extended litigation at a cost of $54,000, thereby extending the patent life to December 31, 2020. What is the proper way to account for this cost? Also, record patent amortization (full year) in 2013. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and ExplanationDebitCredit(To record one year’s amortization)
