F3 - Intangibles

Question 1

Grayson Co. incurred significant costs in defending its patent rights. Which of the following is the appropriate treatment of the related litigation costs if succesfully defended?

Answer 1

Litigation costs would be capitalized if the patent right is successfully defended.

Question 2

Grayson Co. incurred significant costs in defending its patent rights. Which of the following is the appropriate treatment of the related litigation costs if unsuccesfully defended?

Answer 2

Litigation costs would be expensed immediately if the outcome was unfavorable since the patent would be lost and would no longer be able to provide benefit to the company.

Question 3

Which of the following statements is correct concerning start-up costs?

Answer 3

Costs of start-up activities, including organization costs, should be expensed as incurred.