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During the current year, Rodgers Company purchased two assets that are described as follows. Heavy...

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Accounting

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During the current year, Rodgers Company purchased two assets that are described as follows. Heavy Equipment Purchase price, $550,000 Expected to be used for 10 years, with a residual value at the end of that time of $70,000. Expenditures required to recondition the equipment and prepare it for use, $120,000 Patent Purchase price, $80,000 Expected to be used for six years, with no value at the end of that time. Rodgers depreciates heavy equipment by the declining-balance method at 200 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 Rodgers's core business, it sold the patent to a competitor for $38,000. Instructions 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 Rodgers. c. Prepare the plant and intangible assets section of Rodgers'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 year's income statement

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