Harmax Limited spent $5,000 registering an internally developed patent and then another $20,000 defending and enforcing the patent in its first year.How should the patent be reflected in the financial statements?
A)the full $25,000 expensed in the year
B)$5,000 capitalized as Patent asset and the $20,000 expensed
C)$20,000 capitalized as Patent asset and the $5,000 expensed
D)the full $25,000 capitalized in the year

Question

Quizplus · Accepted Answer

The full $25,000 should be capitalized as a Patent asset because both the registration and defense costs are directly attributable to securing and maintaining the patent, thus enhancing its value.

Harmax Limited Spent $5,000 Registering an Internally Developed Patent and Then