Everly must restore the property ( estimated fair value of the obligatio n is $ 100,320 ), after which it can be sold for $ 200,640 . Everly estimat es that 5,016 tons of coal can be extracted . If 878 tons are extracted th e first year , prepare the journal entry to record depletion . Question 22 Francis Corporation purchased an asset at a cost of $ 58,200 on March 1 , 2012 . The asset has a useful life of 8 years and a salvage value of $ 5,820 . For tax purposes , the MACRS class life is 5 years . Compute ta x depreciation for each year 2012 – 2017 . Question 23 Celine Dion Corporation purchases a patent from Salmon Company o n January 1 , 2012 , for $ 50,820 . The patent has a remaining legal life o f 16 years . Celine Dion feels the patent will be useful for 10 years . Pre pare Celine Dion ’ s journal entries to record the purchase of the patent and 2012 amortization . Question 24 Karen Austin Corporation has capitalized software costs of $ 768,500 , and sales of this product the first year totaled $ 390,630 . Karen Austin anticipates earning $ 911,470 in additional future revenues from this p roduct , which is estimated to have an economic life of 4 years . Comp ute the amount of software cost amortization for the first year . ( a ) Compute the amount of software cost amortization for the first yea r using the percent of revenue approach . ( b ) Compute the amount of software cost amortization for the first yea r using the straight-line approach . Question 25 Jeff Beck is a farmer who owns land which borders on the right-ofway of the Northern Railroad . On August 10 , 2012 , due to the admitte d negligence of the Railroad , hay on the farm was set on fire and burn ed . Beck had had a dispute with the Railroad for several years concern ing the ownership of a small parcel of land . The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Beck in exchange for a release of his right to reimburse ment for the loss he has sustained from the fire . Beck appears inclined to accept the Railroad ’ s offer . The Railroad ’ s 2012 financial statemen ts should include the following related to the incident : A ). recognition of a loss only .