Monday, June 29, 2009

A patent: intangible assets

A patent is one of intangible assets, this is right of exclusive use granted by the U.S patent office. Previously patents were valid for 17 years, but the length of time is now 20 years for all new patents. Patents are amortized over the shorter of the patent is legal life or economic useful life of the patent. It is very possible that the economic useful life of the patent is shorter than the legal life of the patent because of changes technologies. When we purchase the patents, we should record the patent in the book at purchase price. This is price should a mortised over the useful life of the patent.
For internally development patents, the amortized amount is generally limited to registration fees and legal fees foe filing the patent.
If a company successfully defends a patent, the cost of the legal defense is added to the intangible asset account and is a mortised over the remaining book value of the patent must be expended immediately, and the legal costs also need to be expended immediately. This is because the court ruling has essentially stated that there is no patent, and if there is no patent, there is no asset.

No comments: