Correction
Classify the later activity before changing the existing asset balance. Identify the purpose, date, resulting right, and applicable guidance for each cost. Topic 730's exclusion of patent litigation does not by itself require either capitalization or expense. Keep an unresolved cost open until its governing recognition rule and facts are documented.
Where to watch
When this mistake may appear
- A company incurs R&D, software, maintenance, restoration, or legal cost after recognizing an intangible asset.
Check your work
Your work may contain this mistake if:
- Uses the existing asset balance as the scope rule.
- Treats a successful legal outcome as automatic capitalization.
- Combines costs with different purposes or project phases.