If a company incurs legal costs in successfully defending its patent these costs are recorded by debiting
A) Legal Expense.
B) an Intangible Loss account.
C) the Patent account.
D) a revenue expenditure account.

Question

Quizplus · Accepted Answer

In this scenario, the company has successfully defended its patent, which means that the patent still holds value. Therefore, the legal costs incurred in defending the patent should be added to the cost of the patent and capitalized in the Patent account. This is done to reflect the true value of the patent, and to ensure that the cost of defending it is not expensed in the period in which the legal costs were incurred.

If a Company Incurs Legal Costs in Successfully Defending Its