[NinaSun]

Hy Corp. bought Patent A for $40,000 and Patent B for $60,000. Hy also paid acquisition costs of $5,000 for Patent A and $7,000 for Patent B. Both patents were challenged in legal actions. Hy paid $20,000 in legal fees for a successful defense of Patent A and $30,000 in legal fees for an unsuccessful defense of Patent B. What amount should Hy capitalize. patents?

a. $65,000

b, $45,000

c. $162,000

d. $112,000

The answer is “a”. I remember Tim told in class that if the defense was unsuccessful, the legal fee should be expense and capitalized asset should be tested for impairment. For this question, I think capitalized $67,000 for patent B should be test for impairment instead of expense the whole $67,000 without other detail told.

AUD-74,75 11/2014
REG-80 04/2015
FAR-74, 91 11/2015
BEC-79 08/2015