On July 14, 2011, Tulsa Company pays $600,000 to acquire a fully equipped factory. The purchase involves the following assets and information.

Â	Appraised	Salvage	Useful	Depreciation
Asset	Value	Value	Life	Method
LandÂ	$160,000	Â	Â	Not depreciated
Land improvements	80,000	$ 0	10 years	Straight-line
BuildingÂ	320,000	100,000	10 years	Double-declining-balance
Machinery	240,000	20,000	10,000 units	Units-of-production*
Total	$800,000	Â	Â	Â

Required

1. Allocate the total $600,000 purchase cost among the separate assets.

2. Compute the 2011 (six months) and 2012 depreciation expense for each asset, and compute the company’s total depreciation expense for both years.

3. On the last day of calendar year 2013, Tulsa discarded machinery that had been on its books for five years. The machinery’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 2013, 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 2013.

5. Late in the year 2013, 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 2013, Tulsa mined and sold 10,000 tons of ore. Journalize the mine’s acquisition and its first year’s depletion.

6.On the first day of 2013, Tulsa exchanged the machinery that was acquired on July 14, 2011, along with $5,000 cash for machinery with a $210,000 market value. Journalize the exchange of these assets assuming the exchange lacked commercial substance. (Refer to background information in parts 1 and 2.)