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Patent - Intangible Asset or Cost

Patent application - Intangible Asset or allocate as a cost therefore 6k loss for the year.

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I have been asked by a new client to complete their End of Year. They have not produced any sales but have spent 6k on a patent application last year. Is this treated as an intangible asset even if the patent application is on hold because of Covid as they do not know what is happening currently or if the application will continue.

Any help/advice greatly appreciated.

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By paul.benny
06th Jul 2020 17:51

Given it's only a patent application at this stage, there is no certainty that it will be granted. On that basis, it's only a potential asset at best.

Capitalisation of an intangible asset requires (amongst other things) it to be probable that future economic benefits will flow from that asset. (FRS102 18.4). If you're comfortable that (a) there is high probability that patent will be granted and (b) economic benefits will flow to the company, you could maybe prepay the cost. Otherwise, expense in the year

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