During 2016, Frank Company Incurred $200,000 in Legal Fees in Defending

question 53

Multiple Choice

During 2016, Frank Company incurred $200,000 in legal fees in defending a patent with a carrying value of $3,500,000 against an infringement. Farver's lawyers were successful with the defense of the patent. The legal fees should be

• A) expensed in 2016 and classified as ordinary expense.
• B) classified as an extraordinary item on the income statement for 2016.
• C) capitalized and amortized over the remaining legal life of the patent.
• D) capitalized and amortized over the remaining economic life or legal life of the patent, whichever is shorter.