If the owner engages in lawsuits to successfully defend a patent,the cost of lawsuits
is debited to the patents account. However, the costs of research and development
leading to a new patent are expensed when incurred.
A patent's cost is amortized over its estimated useful life (not to exceed 17 years). If we purchase a patent costing $25,000 with a useful life 10 years, we
make the following adjusting entry at the end of each of the 10 years to amortize
one-tenth of its cost: