Can I capitalize patents? My company is applying for a patent and I would like to capitalize the research and development expenses. I know legal fees and the successful defense of a patent can be capitalized, but can the actual costs of the patent be? If yes or no, please provide the FASB ruling if you have it or reference.

ANSWER

The BIDaWIZ Team's Answer:

Internally developed patents are difficult to capitalize as the patent must meet certain criteria. Specifically, it must be probable that the expected future benefits that are attributed to the asset will be available to the entity and the cost or value of the asset can be measured reliably. As such, typically only the legal and filing costs associated with defending a patent are capitalized. The research and developmental costs for the product or process are treated as an expense as incurred. This is referenced in FASB No. 142.