Examples of patent in the following topics:
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- There are three types of patents.
- A U.S. patent currently lasts 20 years.
- The value of a patent that a company would record on its books depends on how it acquired the patent.
- If the business purchased the patent from the original holder, the value of the patent equals the acquisition cost.
- The value of the patent may be increased if a patent holding company defends its rights to the invention in a lawsuit.
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- See the figure below for an example of a U.S. patent .
- Scenario A: After 5 years Company X is sued for patent infringement and is required to hire a lawyer.
- The patent lawyer charges $10,000 and is successful in defending Company X's patent.
- The $10,000 spent to defend the patent is capitalized to the value of the patent on Company X's balance sheet and then amortized over the remaining 12 years of the patent's legal life.
- As a result of the useful life of their patent being reduced from 17 years to just 5 years, the remaining unamortized value of $12,000 is expensed and the patent is written down to a value of $0.
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- A software company has a patent valued at $10 million with a useful life of 40 years.
- Due to market conditions, the company believes the patent's value has decreased and tests it for impairment at the end of the year.
- As a result of the impairment, the amortization expense on the patent should be adjusted to reflect the new value.
- Limited-life intangibles are intangible assets with a limited useful life, such as copyrights, patents and trademarks
- Examples of intangible assets with a limited-life include copyrights and patents.
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- Valuation models can be used to value intangible assets such as patents, copyrights, software, trade secrets, and customer relationships.
- Intangible assets generally arise from two sources: (1) exclusive privileges granted by governmental authority or by legal contract, such as patents, copyrights, franchises, trademarks and trade names; and (2) superior entrepreneurial capacity or management know-how and customer loyalty , which is called goodwill.
- The valuation of intangible assets with identifiable useful lives such as patents, trademarks, and copyrights are initially valued at acquisition costs.
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- Examples of intangible assets with identifiable useful lives include copyrights and patents.
- R&D activities frequently result in the development of something that is patented or copyrighted (such as a new product, process, idea, formula, composition, or literary work).
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- Intangible assets with identifiable useful lives (limited-life) include copyrights and patents.
- They include trade secrets, copyrights, patents, and trademarks.
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- Examples of intangible assets are copyrights, trademarks, patents and computer programs, financial assets-- including such items as accounts receivable, bonds and stocks-- and goodwill.
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- For example: the company's relative size compared with other businesses in its industry, relative product or service quality, product or service differentiation from others in the industry, market strengths, market size and share, competitiveness within its industry in terms of price and reputation, and copyright or patent protection.
- The company's relative size compared with other businesses in its industry, relative product or service quality, product or service differentiation from others in the industry, market strengths, market size and share, competitiveness within its industry in terms of price and reputation, and copyright or patent protection of its products are all important in this examination.
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- The most common types of intangibles are patents, copyrights, franchises or licenses, trademarks or trade names, and goodwill.
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- Legal intangibles are also known as intellectual property, and include trade secrets, copyrights, patents, and trademarks.