| Rothchild depreciates heavy equipment by the declining-balance method at 150 percent of the straight-line rate. It amortizes intangible assets by the straight-line method. At the end of two years, because of changes in Rothchild's core business, it sold the patent to a competitor for $30,000. | | A. Compute the amount of depreciation expense on the heavy equipment for each of the first three years of the asset's life. | | B. Compute the amount of amortization on the patent for each of the two years it was owned by Rothchild. C. Prepare the plant and intanglinble assets section of Rothchild's balance sheet at the end of the first and second years. Also, calculate the amount of the gain or loss on the patent that would be included in the second years income statement. Please select the proper format from below as an example of how it should be prepared and use that as a template of how it should look: | a. (1) Straight-Line Schedule | | | | | | Depreciation Expense | | Accumulated Depreciation | Book | | | Year | Computation | | Value | | | | 2015 | $35,000 x 1/5 | $7,000 | | $7,000 | | $ 33,000 | | | | 2016 | 35,000 x 1/5 | 7,000 | | 14,000 | | 26,000 | | | | 2017 | 35,000 x 1/5 | 7,000 | | 21,000 | | 19,000 | | | | 2018 | 35,000 x 1/5 | 7,000 | | 28,000 | | 12,000 | | | | 2019 | 35,000 x 1/5 | 7,000 | | 35,000 | | 5,000 | | | | | | | | | | | | | | | | | | | | | | | | | (2) 200% Declining-Balance Schedule | | | | | | Depreciation Expense | | Accumulated | | Book | | | Year | Computation | | Depreciation | | Value | | | | 2015 | $40,000 x 40% | $16,000 | | $16,000 | | $ 24,000 | | | | 2016 | 24,000 x 40% | 9,600 | | 25,600 | | 14,400 | | | | 2017 | 14,400 x 40% | 5,760 | | 31,360 | | 8,640 | | | | 2018 | 8,640 x 40% | 3,456 | | 34,816 | | 5,184 | | | | 2019 | $5,184 $5,000 | 184 | | 35,000 | | 5,000 | | | | | | | | | | | | | | | | | | | | | | | | | (3) 150% Declining-Balance Schedule | | | | | | Depreciation Expense | | Accumulated | | Book | | | Year | Computation | | Depreciation | | Value | | | | 2015 | $40,000 x 30% | $12,000 | | $12,000 | | $ 28,000 | | | | 2016 | 28,000 x 30% | 8,400 | | 20,400 | | 19,600 | | | | 2017 | 19,600 x 30% | 5,880 | | 26,280 | | 13,720 | | | | 2018* | ($13,720 $5,000) 2 yrs. | 4,360 | | 30,640 | | 9,360 | | | | 2019* | ($13,720 $5,000) 2 yrs. | 4,360 | | 35,000 | | 5,000 | | | | * Switch to straight-line | | | | | | | |
