exclusive right given by the government to the company to use, manufacture, and sell a product or process for a 20-year period without interference or infringement by other parties. Patent is classified as an intangible asset. Costs such as registration fees and attorney costs incurred in obtaining the patent are capitalized.Research and development costs applicable to developing the product, process, or idea are immediately expensed. Legal costs of a successful defense of a patent are capitalized and amortized over the remaining life. If the patent right is lost in court it should be written off and shown as an extraordinary charge. The cost of a patent purchased from an outsider is deferred and amortized. If the sole purpose of buying the outsider patent is to eliminate the competition, the amortization period is the remaining life of the company's patent that is being protected. The patent is amortized on a straight-line basis over its 20-year life, or its economic life, if less. As a practical matter, often the useful life is less than 20 years due to changes in the marketplace and new technology. If a patent is assigned to others, royalties obtained are accrued as revenue is earned.