Reference no: EM132756321

The following transactions involving intangible assets of Pharoah Corporation occurred on or near December 31, 2020.

1. Minton paid Grand Company $360,000 for the exclusive right to market a particular product, using the Grand name and logo in promotional material. The franchise runs for as long as Pharoah is in business.

2. Pharoah spent $732,000 developing a new manufacturing process. It has applied for a patent, and it believes that its application will be successful.

3. In January, 2021, Pharoah's application for a patent (#2 above) was granted. Legal and registration costs incurred were $247,800. The patent runs for 20 years. The manufacturing process will be useful to Minton for 10 years.

4. Pharoah incurred $163,200 in successfully defending one of its patents in an infringement suit. The patent expires during December, 2024.

5. Pharoah incurred $441,600 in an unsuccessful patent defense. As a result of the adverse verdict, the patent, with a remaining unamortized cost of $241,920, is deemed worthless.
(To record amount incurred.)

6. Pharoah paid Sneed Laboratories $126,880 for research and development work performed by Sneed under contract for Pharoah. The benefits are expected to last six years. (To record unamortized cost.)

Problem a) Prepare journal entries for on the date of transaction.

Problem b) Prepare journal entry (ies) for on December 31, 2021 to record any resultant amortization.