Question 10.6: On July 1, 2018, Tulsa Company pays $600,000 to acquire a fu...

On July 1, 2018, Tulsa Company pays $600,000 to acquire a fully equipped factory. The purchase includes the following assets and information.

Required
1. Allocate the total $600,000 purchase cost among the separate assets.
2. Compute the 2018 (six months) and 2019 depreciation expense for each asset, and compute the company’s total depreciation expense for both years. The machinery produced 700 units in 2018 and 1,800 units in 2019.
3. On the last day of calendar-year 2020, Tulsa discarded equipment that had been on its books for five years. The equipment’s original cost was $12,000 (estimated life of five years) and its salvage value was $2,000. No depreciation had been recorded for the fifth year when the disposal occurred. Journalize the fifth year of depreciation (straight-line method) and the asset’s disposal.
4. At the beginning of year 2020, Tulsa purchased a patent for $100,000 cash. The company estimated the patent’s useful life to be 10 years. Journalize the patent acquisition and its amortization for the year 2020.
5. Late in the year 2020, Tulsa acquired an ore deposit for $600,000 cash. It added roads and built mine shafts for an additional cost of $80,000. Salvage value of the mine is estimated to be $20,000. The company estimated 330,000 tons of available ore. In year 2020, Tulsa mined and sold 10,000 tons of ore. Journalize the mine’s acquisition and its first year’s depletion.
6.^{A} (This question applies to this chapter’s Appendix coverage.) On the first day of 2020, Tulsa exchanged the machinery that was acquired on July 1, 2018, along with $5,000 cash for machinery with a $210,000 market value. Journalize the exchange of these assets assuming the exchange has commercial substance. (Refer to background information in parts 1 and 2.)