On September 5, 2020, Nelson Lumber purchased timber rights in Northern Quebec for $549,000, paying...
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On September 5, 2020, Nelson Lumber purchased timber rights in Northern Quebec for $549,000, paying $109,000 cash and the balance by issuing a non-current note. Logging the area is expected to take three years, and the timber rights will have no value after that time. On September 27, 2020, Nelson Lumber purchased a patent $161,000 for new logging equipment on account. It is expected that the patent will be technologically obsolete in 10 years. Nelsons year-end is December 31 and it uses the straight-line method to the nearest month to amortize intangibles. Required: 1. Record the acquisition of the timber rights and the patent.
2. Record amortization on the timber rights and the patent at December 31, 2020, and December 31, 2021.
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You can see the logs in the Dashboard.