Harmax Limited spent $5,000 registering an internally developed patent and then another $20,000 defending and enforcing the patent in its first year. How should the patent be reflected in the financial statements?

The full $25,000 expensed in the year.

$5,000 capitalized as Patent asset and the $20,000 expensed.

$20,000 capitalized as Patent asset and the $5,000 expensed.

The full $25,000 capitalized in the year.