Patents

Code: 1231
👁 Views: 101

Account Information

Financial Statement Statement of Financial Position
Normal Balance Debit

Definition

Value of patents and intellectual property rights owned by the company

Common Journal Entries

Register new patent

Dr. Patents
Cr. Bank Account

Amortize patent

Dr. Amortization Expense
Cr. Accumulated Amortization

Sell patent at a gain

Dr. Bank Account
Cr. Patents
Cr. Gain on Asset Disposal

Write off expired patent

Dr. Write-off Expense
Cr. Patents

Register new patent

Dr. Patents
Cr. Bank Account

Amortize patent

Dr. Amortization Expense
Cr. Accumulated Amortization

Sell patent at a gain

Dr. Bank Account
Cr. Patents
Cr. Gain on Asset Disposal

Write off expired patent

Dr. Write-off Expense
Cr. Patents

📐 IFRS vs US GAAP Accounting Treatment

IFRS IAS 38 Intangible Assets
US GAAP ASC 350 Intangibles - Goodwill and Other

❓ Frequently Asked Questions

Q: How is a patent amortized?

A: Amortized over its legal or economic life, whichever is shorter (usually up to 20 years), using the straight-line method.

Q: Can patent defense costs be capitalized?

A: If the lawsuit is successful and enhances the economic benefits of the patent, costs are capitalized and amortized over the remaining life. If unsuccessful, costs are expensed.