During 2013, Frank Company incurred $200,000 in legal fees in defending a patent with a carrying value of $3,500,000 against an infringement. Farver's lawyers were successful with the defense of the patent. The legal fees should be

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The legal fees incurred in defending a patent should be capitalized and amortized over the remaining economic or legal life of the patent, whichever is shorter. Since the patent has a carrying value of $3,500,000, it is reasonable to assume that the remaining economic life of the patent is longer than its legal life. Therefore, the legal fees should be capitalized and amortized over the remaining economic life of the patent. This treatment follows the matching principle, which requires expenses to be matched with the revenues they help generate.

During 2013, Frank Company Incurred $200,000 in Legal Fees in Defending