Question

Wiser Pharmaceutical has received a utility patent from the US Patent and Trademark Office. It sold this patent to another pharmaceutical company for $50,000. Under which accounting head did Wiser record the patent in its books of accounts before the sale?
A. expenses
B. income
C. intangible assets
D. tangible assets

Answer 1

Answer: C. Intangible assets

Intangible Assets refer to those assets that have no physical form and hence cannot be touched. They may be identified or unidentified.  

Those intangible assets that can be separated from a company’s assets and can be sold are known as identifiable intangible assets. These include intellectual property rights, patents, copyrights, trademarks etc.  

Those intangible assets that can’t be physically separated from the company are known as unidentifiable intangible assets. e.g. goodwill.