A company buys a patent for $60K, it gets challenged in court and they pay $20K in atty fees but they lose the case. Does the patent still get recorded as an asset? If so am I including the atty fees as part of the acquisition cost? Since and the company lost its defense of the patent and it is not an asset how would I record it?

The $20K spent on legal fees for an unsuccessful defense of a patent will be Expensed as incurred.

The Patent would then have to be reevaluated to see if it is still good and for how long. Then the Assest would be written down (for a shorter useful life) or written off (totally impaired) immediately to Expense.