Pharoah Company has provided information on intangible assets as follows.A patent was purchased from Shamrock Company for $1,700,000 on January 1, 2024. Pharoah estimated the remaining useful life ofthe patent to be 10 years. The patent was carried in Shamrock's accounting records at a net book value of $1,700,000 when Shamrocksold it to Pharoah.During 2025, a franchise was purchased from Flounder Company for $460,000. In addition, 5% of revenue from the franchise must bepaid to Flounder. Revenue from the franchise for 2025 was $2,410,000. Pharoah estimates the useful life of the franchise to be 10years and takes a full year's amortization in the year of purchase.Pharoah incurred research and development costs in 2025 as follows.Materials and equipmentPersonnelIndirect costs$162,000184,000113,000$459,000Pharoah estimates that these costs will be recouped by December 31, 2028. The materials and equipment purchased have noalternative uses.On January 1, 2025, because of recent events in the field, Pharoah estimates that the remaining life of the patent purchased onJanuary 1, 2024, is only 5 years from January 1, 2025. Prepare a schedule showing the intangibles section of Pharoah's balance sheet at December 31, 2025. (Enter account name onlyand do not provide descriptive information.)PHAROAH COMPANYIntangibles Section of Balance Sheet$LA$LA

Introduction:- Intangible asset: an identifiable non-monetary asset without physical substance. The…

Answered: Prepare a schedule showing the…

Prepare a schedule showing the intangibles section of Pharoah's balance sheet at December 31, 2025. (Enter acco and do not provide descriptive information!

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 8P

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Question

Pharoah Company has provided information on intangible assets as follows.
A patent was purchased from Shamrock Company for $1,700,000 on January 1, 2024. Pharoah estimated the remaining useful life of
the patent to be 10 years. The patent was carried in Shamrock's accounting records at a net book value of $1,700,000 when Shamrock
sold it to Pharoah.
During 2025, a franchise was purchased from Flounder Company for $460,000. In addition, 5% of revenue from the franchise must be
paid to Flounder. Revenue from the franchise for 2025 was $2,410,000. Pharoah estimates the useful life of the franchise to be 10
years and takes a full year's amortization in the year of purchase.
Pharoah incurred research and development costs in 2025 as follows.
Materials and equipment
Personnel
Indirect costs
$162,000
184,000
113,000
$459,000
Pharoah estimates that these costs will be recouped by December 31, 2028. The materials and equipment purchased have no
alternative uses.
On January 1, 2025, because of recent events in the field, Pharoah estimates that the remaining life of the patent purchased on
January 1, 2024, is only 5 years from January 1, 2025.

Prepare a schedule showing the intangibles section of Pharoah's balance sheet at December 31, 2025. (Enter account name only
and do not provide descriptive information.)
PHAROAH COMPANY
Intangibles Section of Balance Sheet
$
LA
$
LA

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Prepare a schedule showing the income statement effect (related to expenses) for the year ended December 31, 2025, as a
result of the facts above. (Enter account name only and do not provide descriptive information.)
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>
>
PHAROAH COMPANY
Income Statement Effect
LA
LA
tA

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