List the errors you find in the following partial balance sheet:Burnt Red Company Balance Sheet December 31,

List the errors you find in the following partial balance sheet:

Burnt Red Company Balance Sheet December 31, 20Y2 Assets Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $350,000 Replacement Cost Accumulated Depreciation Book   Value Property, plant, and equipment:

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250,000 $  50,000 $200,000 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 160,000 290,000 Factory equipment . . . . . . . . . . . . . . . . . . . . . . . . . 375,000 140,000 235,000 Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000 60,000 65,000 Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000 — 90,000 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 10,000 50,000

Total property, plant, and equipment . . . . .$1,350,000 $420,000 $930,000

Answer:

1. Fixed assets should be reported at cost and not replacement cost.

2. Land does not depreciate.

3. Patents and goodwill are intangible assets that should be listed in a separate section following the Fixed assets section. Patents should be reported at their net book values (cost less amortization to date). Goodwill should not be amortized but should be written down only upon impairment.