How to compile accounting entries for purchasing patent rights?

In order to make up for their own shortcomings and expand their market competitiveness, some enterprises will outsource patents, which belongs to the category of intangible assets accounting. How to make specific accounting entries?

Accounting entries for purchasing patent rights

Patents purchased are generally intangible assets, which will be amortized in the future.

Borrow: intangible assets-patent fees

Loans: bank deposits

The amortization period of intangible assets begins when it is available for use and ends when it is derecognized. Intangible assets added in the current month shall be amortized in the current month; Intangible assets reduced in the current month shall not be amortized in the current month.

Borrow: management expenses-intangible assets (for personal use)

Other business costs-intangible assets (lease)

Manufacturing cost-intangible assets (used for product production)

Loan: accumulated amortization

Cumulative amortization is used to amortize intangible assets, and its balance is generally registered with the lender, who has accrued cumulative amortization. Cumulative amortization account is an asset account, which is used to calculate the amortization of intangible assets. Deductions listed as intangible assets in the balance sheet. Cumulative amortization only belongs to the adjustment subject of intangible assets, and the registration direction is opposite to that of intangible assets.

Accounting Treatment of Disposal of Intangible Assets

Debit: bank deposit

Intangible assets impairment reserve

Gains and losses on asset disposal (when losses occur)

accumulated amortization

Loan: intangible assets

Taxes payable-VAT payable (output tax)

Profit and loss of asset disposal (when realizing income)

Accounting content of intangible assets

Intangible assets are identifiable non-monetary assets owned or controlled by enterprises without physical form, and the economic benefits related to the assets are likely to flow into enterprises and their costs can be measured reliably. Generally including patent rights, trademark rights, etc. The cost of purchasing intangible assets is accounted for according to the actual cost. The outsourcing cost includes the purchase price, related taxes and other expenses directly attributable to making the assets reach the intended usable state, advertising fees, management fees and other indirect expenses incurred for introducing new products. The expenses incurred after the intangible assets reach the intended usable state are not intangible assets.