Reference no: EM132530727

Question - In examining the books of ABC Manufacturing Company, you find on the December 31, 2017 balance sheet the item, "Costs of patents, Tk. 308,440." Referring to the ledger accounts, you note the following items regarding one patent acquired in 2014: 2014 Legal costs incurred in defending the validity of the patent Tk. 3,500 2016 Legal costs in prosecuting an infringement suit 7,900 2016 Legal costs (additional expenses) in the infringement suit 1,500 2016 Cost of improvements (unpatented) on the patented device 4,800 There are no credits in the account, and the company has not recorded any amortization for any of the patents. There are three other patents issued in 2001, 2003, and 2004; all were developed by the staff of the client. The patented articles are presently very marketable, but are estimated to be in demand only for the next few years.

Required - Discuss the items included in the Patent account from an accounting standpoint.