If a company loses a patent infringement lawsuit, should the legal fees be expensed or capitalized?
When a company loses a patent infringement lawsuit, meaning they unsuccessfully defended their patent, then any legal fees should be expensed in the period incurred. A company would only capitalize the legal fees if they successfully defended their patent.
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In a patent infringement lawsuit, should the legal fees be capitalized?
If a company incurs legal fees related to a patent infringement lawsuit, the legal fees should only be capitalized if the company successfully defends their patent (i.e. they win). If the company unsuccessfully defends, then the company expenses the legal fees in the period incurred.