Patent Costs Revenue or Capital

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I have a client who has devloped a new system which perviously had an informal patent for. During last accounting period, an appilcation was made to obtain a patent for this. With it being internally generated would it be correct to expense this cost to profit and loss.

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By paul.benny
28th Jul 2020 11:04

Internally-generated goodwill cannot be capitalised but there is no reason in principle why you can't capitalise the costs of a successful patent application and potentially also the R&D that let to the patented invention. The question would be whether there is a revenue stream arising from exploitation of the patent that will recover the capitalised amount.

Until the patent is grant actually granted, you can't be sure that the application will be successful. I would be comfortable with treating the costs as a prepayment until the patent decision is received.

I'm not a patent attorney but afaik, there's no such thing as an informal patent.

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