Practice prompt · Q:intangibles-research-software-and-goodwill/amortizable-amount-and-later-spending-001

Select a useful life and route later spending

Tests whether the learner uses renewal and economic evidence for useful life and refuses to treat an R&D scope exclusion as a recognition rule.

Updated Sep 11, 2026 Review due Nov 18, 2026

Practice

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A patent has four years remaining in its legal term, but the rights can be renewed for two additional four-year periods at nominal cost. The entity has evidence supporting ten years of expected economic use. It incurs $400,000 of patent-litigation cost after a successful defense and $900,000 of product- development activity that is within Topic 730. Which conclusion is supported?

Choose the best answer. a Use the supported ten-year useful life; expense the stated Topic 730 product-development cost; and research the rule governing the patent litigation before changing the patent balance. b Use four years because the current legal term always caps useful life; add both later costs to the patent because the company already owns it. c Use ten years; capitalize the legal cost automatically because the defense succeeded; and expense the Topic 730 development cost. d Use twelve years because two renewals are legally available; expense both costs because all later intangible spending follows Topic 730.

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Answer: a

Choice a. Use the supported ten-year useful life. Expense the stipulated product-development activity under Topic 730. Do not decide the patent- litigation cost from the lawsuit outcome alone. Topic 730 excludes that legal work from its scope, so identify and apply the guidance governing the legal service and the patent before changing the patent's carrying amount.