Here is the situation. Two divorcing individuals are disputing the value of a company that the two built. After, reviewing the books, one of the parties argues that the other party’s books does not reflect the value of a patent for a medical product they the two individuals developed and held.
The charged party argues that the patent was never recorded as an asset but was instead expensed. That is, the cost of developing the patent was expensed therefore the cost was never capitalized. So the question is:
Q: Is this a common practice for patents?
A: According to some accountants, this is a standard practice for some types if patents.
Specifically, according to some accountants, internally generated intangibles are never capitalized, their cost to develop is expensed. According to FASB ASC 350, 805, only acquired intangibles are on the balance sheet.