million exploring for the minerals, one-fourth of which were
successful; and (3) $60 million to develop the site. Management
estimated that 20 million tons of ore would ultimately be removed
from the property. Wages and other extraction costs for the current
year amounted to $10 million. In total, 2 million tons of ore were
removed from the deposit in the current year. The entire production
for the period was sold. What amount of depletion is recognized
during the current year under the full costing method?
28. On January 2, 2005, Ral Co. leased land and a building from an
unrelated lessor for a 10-year term. The lease has a renewal option for
an additional 10 years, but Ral has not reached a decision with regard
to the renewal option. In early January of 2005, Ral completed the
following improvements to the property:
29. Amortization of leasehold improvements for 2006 should be:
30. The machines were put into use immediately. Machine A has a
useful life of 5 years and can only be used in one research project.
Machine B will be used for 2 years on a research and development
project and then used by the production division for an additional 8
years. Wizard uses the straight-line method of depreciation.
31. What amount should Wizard include in 2005 research and
development expense?
32. Hull Co. bought a trademark from Roe Corp. on January 1, 2005,
for $224,000.
Hull retained an independent consultant who estimated the
trademark's remaining useful life to be 20 years. The trademark most
likely will not be renewed. Its unamortized cost on Roe's accounting
records was $112,000.
In Hull's December 31, 2005 Balance Sheet, what amount should be
reported as accumulated amortization?