Accounting for Patents

In 2019, Price Company expended $325,000 on a research project. In 2020, Price obtained a patent for this project. Legal and administrative costs to secure the patent totaled $116,000. The patent had an expected useful life of 5 years. Price capitalized the patent and recorded a full years amortization.

In January 2021, Price successfully defends the patent in extended litigation at a cost of $147,200, thereby extending the patents useful life to December 31, 2028. The company also recorded a full years amortization on the extended litigation costs.

What is the carrying value of the patent on January 1, 2026?

$