Devon Pharoah Company has provided information on intangible assets as follows. A patent was purchased from Shamrock Company for $1,600,000 on January 1, 2021. 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 $1,100,000 when Shamrock sold it to Pharoah. During 2022, a franchise was purchased from Sheffield Company for $490,000. In addition, 5% of revenue from the franchise must be paid to Sheffield. Revenue from the franchise for 2022 was $2,320,000. 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 2022 as follows. Materials and equipment Personnel Indirect costs $159,000 191,000 114,000 $464,000 Pharoah estimates that these costs will be recouped by December 31, 2025, but due to uncertainty in the market, its process has not achieved economic viability. The materials and equipment purchased have no alternative uses. On January 1, 2022, because of recent events in the field, Pharoah estimates that the remaining life of the patent purchased on January 1, 2021, is only 5 years from January 1, 2022. Prepare the intangibles section of Pharoah's statement of financial position at December 31, 2022. (Enter account name only and do not provide descriptive information.)
Devon Pharoah Company has provided information on intangible assets as follows. A patent was purchased from Shamrock Company for $1,600,000 on January 1, 2021. 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 $1,100,000 when Shamrock sold it to Pharoah. During 2022, a franchise was purchased from Sheffield Company for $490,000. In addition, 5% of revenue from the franchise must be paid to Sheffield. Revenue from the franchise for 2022 was $2,320,000. 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 2022 as follows. Materials and equipment Personnel Indirect costs $159,000 191,000 114,000 $464,000 Pharoah estimates that these costs will be recouped by December 31, 2025, but due to uncertainty in the market, its process has not achieved economic viability. The materials and equipment purchased have no alternative uses. On January 1, 2022, because of recent events in the field, Pharoah estimates that the remaining life of the patent purchased on January 1, 2021, is only 5 years from January 1, 2022. Prepare the intangibles section of Pharoah's statement of financial position at December 31, 2022. (Enter account name only and do not provide descriptive information.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Devon Pharoah Company has provided information on intangible assets as follows.
A patent was purchased from Shamrock Company for $1,600,000 on January 1, 2021. 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 $1,100,000 when Shamrock sold it to Pharoah.
During 2022, a franchise was purchased from Sheffield Company for $490,000. In addition, 5% of revenue from
the franchise must be paid to Sheffield. Revenue from the franchise for 2022 was $2,320,000. 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 2022 as follows.
Materials and equipment
$159,000
Personnel
191,000
Indirect costs
114,000
$464,000
Pharoah estimates that these costs will be recouped by December 31, 2025, but due to uncertainty in the
market, its process has not achieved economic viability. The materials and equipment purchased have no
alternative uses.
On January 1, 2022, because of recent events in the field, Pharoah estimates that the remaining life of the
patent purchased on January 1, 2021, is only 5 years from January 1, 2022.
Prepare the intangibles section of Pharoah's statement of financial position at December 31, 2022. (Enter
account name only and do not provide descriptive information.)
DEVON PHAROAH COMPANY
Intangibles Section of Statement of Financial Position
= SUPPORT
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