Which statement concerning patents is true?
A) A patent in Australia gives the holder the exclusive right to produce and sell a particular product for a period of 70 years.
B) Research costs spent on internal patent development cannot be recognised as an asset under IAS 38/AASB 138.
C) A patent that is purchased from its holder is debited to an asset account and must be amortised over a 20 year period.
D) A patent that has been capitalised is shown in the balance sheet on one line at its net value.

Question

Quizplus · Accepted Answer

According to IAS 38/AASB 138, research costs spent on internal patent development cannot be recognised as an asset. This is because it is difficult to reliably measure future economic benefits from research activities before the outcome is known. Option A is incorrect because a patent in Australia usually lasts for 20 years, not 70 years. Option C is also incorrect because a purchased patent is debited to an intangible asset account and amortised over its useful life, not a fixed 20 year period. Option D is incorrect because a patent that has been capitalised is shown on the balance sheet as a separate line item under intangible assets, along with its accumulated amortisation.

Which Statement Concerning Patents Is True