As the recently appointed auditor for Pharoah Corporation, you have been asked to examine selected accounts before the six-month financial statements of June 30, 2023, are prepared. The controller for Pharoah mentions that only one account is kept for intangible assets. The entries in Intangible Assets since January 1, 2023, are as follows: Jan. 4 5 Feb. 11 Apr. 30 June 1 30 INTANGIBLE ASSETS Research costs Legal costs to obtain patent Payment of seven months' rent on property leased by Pharoah (February to August) Proceeds from issue of common shares Promotional expenses related to start-up of business Development stage costs (meet all six development stage criteria) Start-up costs for first six months of operations Debit 1,056,200 42,000 49,700 168,000 225,000 311,000 Credit 304,200 Balance 1,056,200 1,098,200 1,147,900 843,700 1,011,700 1,236,700 1,547,700 Prepare the journal entry or entries needed to correct this account. Assume that the patent and the development costs have a useful life of 10 years and that Pharoah follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries. Round answers to 0 decimal places, e.g. 5,125.)
As the recently appointed auditor for Pharoah Corporation, you have been asked to examine selected accounts before the six-month financial statements of June 30, 2023, are prepared. The controller for Pharoah mentions that only one account is kept for intangible assets. The entries in Intangible Assets since January 1, 2023, are as follows: Jan. 4 5 Feb. 11 Apr. 30 June 1 30 INTANGIBLE ASSETS Research costs Legal costs to obtain patent Payment of seven months' rent on property leased by Pharoah (February to August) Proceeds from issue of common shares Promotional expenses related to start-up of business Development stage costs (meet all six development stage criteria) Start-up costs for first six months of operations Debit 1,056,200 42,000 49,700 168,000 225,000 311,000 Credit 304,200 Balance 1,056,200 1,098,200 1,147,900 843,700 1,011,700 1,236,700 1,547,700 Prepare the journal entry or entries needed to correct this account. Assume that the patent and the development costs have a useful life of 10 years and that Pharoah follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries. Round answers to 0 decimal places, e.g. 5,125.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:As the recently appointed auditor for Pharoah Corporation, you have been asked to examine selected accounts before the six-month financial statements of June 30,
2023, are prepared. The controller for Pharoah mentions that only one account is kept for intangible assets. The entries in Intangible Assets since January 1, 2023, are
as follows:
Jan. 4
5
Feb. 11
Apr. 30
June 1
30
Research costs
Legal costs to obtain patent
Payment of seven months' rent on property leased by Pharoah (February to August)
Proceeds from issue of common shares
Promotional expenses related to start-up of business
Development stage costs (meet all six development stage criteria)
Start-up costs for first six months of operations
(To correct intangible asset account)
INTANGIBLE ASSETS
(To record amortization expense)
(To record amortization expense)
Debit
1,056,200
Debit
42,000
49,700
168,000
225,000
311,000
Credit
Prepare the journal entry or entries needed to correct this account. Assume that the patent and the development costs have a useful life of 10 years and that Pharoah
follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries. Round answers to 0 decimal
places, e.g. 5,125.)
Account Titles and Explanation
Credit
304,200
Balance
1,056,200
1,098,200
1,147,900
843,700
1,011,700
1,236,700
1,547,700
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