During 2016, Debbie Company incurred $240,000 in legal fees in defending a patent with a carrying value of $4,500,000 against an infringement. Debbie's lawyers were not successful with the defense of the patent. The legal fees should be

Question

Quizplus · Accepted Answer

Legal fees incurred in defending a patent, regardless of the outcome, are considered period costs and should be expensed in the period they are incurred. They are treated as ordinary expenses because they do not meet the criteria for capitalization or classification as extraordinary items.

During 2016, Debbie Company Incurred $240,000 in Legal Fees in Defending