Ask Experts Questions for FREE Help !
Ask
    vaemt's Avatar
    vaemt Posts: 9, Reputation: 1
    New Member
     
    #1

    Feb 11, 2007, 12:52 PM
    Patents in accounting
    I need help again!

    I have to create a income statement, owners equity & balance sheet but I am stuck on one thing. Is a patent an asset or expense? All it says is patent and gives an amount on my example. No explanation nothing... I know that you have to pay for a patent but you can also make money on a patent as well (or am I wrong). If anyone knows which category I should place this in I would be ever grateful and I hope to grasp these concepts soon... does anyone also know of an online tutor for accounting? I am getting desperate for help and I am taking my accounting class through distance education which means no classroom time... thanks for all the help with both questions!:o
    vaemt's Avatar
    vaemt Posts: 9, Reputation: 1
    New Member
     
    #2

    Feb 11, 2007, 01:51 PM
    Also I just noticed that I did not post this one under homework help! I am SOOOO very sorry for not posting it in the correct place I will do better next time! Sorry again and please if anyone can answer my questions I will be very grateful and sorry again for posting in the wrong place!
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
    Ultra Member
     
    #3

    Feb 11, 2007, 02:01 PM
    Hello Vaemt,

    A patent is an intangible asset.

    When you buy it, the JE is:
    Dr. Patent
    Cr. Cash

    At the end of the year, you also have to check if the value of the patent has gone down and whether you have to write it down or not.
    KongTheKonqueror's Avatar
    KongTheKonqueror Posts: 75, Reputation: 13
    Junior Member
     
    #4

    Feb 11, 2007, 09:37 PM
    Wouldn't you amortize or depreciate the total cost of the patent over the life of the patent since they have a limited life?
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
    Ultra Member
     
    #5

    Feb 13, 2007, 10:06 PM
    If the patent (or any intangible asset) has a limited life, you do amortize it over its life, plus you check for impairment when events/circumstances indicate there might be an impairment.

    If the intangible asset has an unlimited life, there is no amortization, but you must test for impairment every year.

    Since patent's do have limited lives, you are right Kong, is should be amortized over its life.
    road_runner's Avatar
    road_runner Posts: 1, Reputation: 1
    New Member
     
    #6

    Mar 14, 2008, 04:38 AM
    I have a further question on the same subject. If an patent is sold to another company for a token amount, say $1 but the patent is actually worth a lot more, say $1,000,000. What would the entry be?

    Dr. Intangible Asset $1,000,000
    Cr. Cash $1
    Cr. $999,999

    Would the extra amount be taken to equity or a revaluation reserve?
    Fubar007's Avatar
    Fubar007 Posts: 1, Reputation: 1
    New Member
     
    #7

    Dec 3, 2008, 03:53 PM

    It should be recoded at book value so it woud just be recorded at the price bought.

    Dr. Intangable asset $1
    Cr. Cash $1

    If the company decides to sell it for more because they feel it is worth more then its recorded as a gain from sales

    Dr. Cash
    Cr. Intangable asset
    Cr. Revenue from sales
    Suviiiii's Avatar
    Suviiiii Posts: 1, Reputation: 1
    New Member
     
    #8

    Oct 22, 2009, 05:14 PM
    Wow u guys are on crack!
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
    Uber Member
     
    #9

    Oct 22, 2009, 09:42 PM

    Brilliant first post, especially when you dug up a thread that hasn't been posted to for a year.
    slashnoob's Avatar
    slashnoob Posts: 1, Reputation: 1
    New Member
     
    #10

    Jan 22, 2011, 08:02 PM
    here you can get some ideas of patent>>
    http://www.youtube.com/watch?v=K3zK5I86xNU&feature=related

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Accounting [ 6 Answers ]

I am having problems with the following multiple choice questions. I have given my answers to the questions at the bottom after the questions. I would appreciate if someone tells me if answers are right or not. And if they are not, I would appreciate it if they could tell me what the correct answer...

Patents [ 1 Answers ]

I have three patents, that was not so bad, it's getting them to market, it's a whole new world out there, What should I do ?

Accounting [ 1 Answers ]

I am currently in managerial accounting and if anyone could be of help, I'd really appreciate it... here are some problems I have no clue how to solve: Shipping costs at Fisheries Inc. are a mixed cost with a variable and fixed cost components. Records indicate the company shipped 6000 tons of...

Accounting [ 3 Answers ]

On Oct 5 Install new wiring throughout the building at a cost of 30,000. It is expected that the life of the building will be extended as a result. Oct 6 Sold an old truck with the cost of 11,000 and accumulated depreciation prior to the current year of 9,600 for 1,000. Depreciation has been...


View more questions Search