The ownership of a patent is verified by inspection of the certificate issued in respect of grant of the patent. It has been purchased, the agreement surrendering it in favour of the client should be examined. It must also be observed that the rights are ‘alive’ and legally enforceable and renewal fees have been paid on due dates by being charged to revenue and to the Patent Account. The last renewal receipt should be examined to ascertain that the patent has not lapsed. If a number of patents are held, a schedule thereof should be obtained. The auditor should ensure that partners are being shown at cost less amortisation charges. The cost of a patent includes it purchase price and the registration cost if brought outright. If the patent has been developed by the client in-house, all development expenses, legal charges, including registration fees and other direct costs incurred in creating it, should be capitalized. The cost of patent should be written off over the legal term of its validity or over its useful commercial life, whichever is shorter. AS-26 has suggested ten years as useful life until and unless there is clear evidence that useful life is longer than ten years. As stated earlier, student may refer to AS-26 as well.
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