18) What are natural resources? Give some examples. How are they accounted for?
19) Explain why certain long-term assets are depreciated, amortized, or depleted instead of remaining in the accounting records at cost until the time of disposal.
20) Sharp Company owns a copyright and a patent. The copyright was acquired at a cost of $160,000 and the patent was purchased for $475,000. The copyright has an estimated useful life of 25 years and the patent has a 19-year estimated useful life. Both assets have estimated salvage values of zero.
Required:
1. Describe this information’s effect on the income statement. Assume the assets are used for a full year.
2. Calculate the balance sheet carrying value of each asset after
three
years of use.
3. Explain how intangible assets have value.
21) Use the following code to identify the expense associated with each of the assets listed below:
A = Depreciation expense
B = Depletion expense
C = Amortization expense
D = None of the above
______ 1. Land
______ 2. Patent
______ 3. Oil reserves
______ 4. Lumber
______ 5. Franchise
______ 6. Equipment
______ 7. Inventory
______ 8. Computers
______ 9. Office supplies
______ 10. Office furniture