Trademark - treatment in books

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Querist : Anonymous

Querist : Anonymous (Querist)

29 August 2012 Recently a trademark was registered and incurred legal expense of 10000.

how to value the trademark in books as asset ?

Gursimar Singh

Gursimar Singh (Expert)
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29 August 2012 Treat as Intangble asset and claim dep. accordingly..

Querist : Anonymous

Querist : Anonymous (Querist)

29 August 2012 s its known to treat as intangible. Cost of it? Valuation of trademark. What value be assigned. newly applied and obtained

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2025 Great question! Here’s how you should treat a **newly registered trademark** and its associated costs in your accounting books:

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## ✅ Accounting Treatment of Trademark (Registered) and Legal Expenses

### 1. **Classification as an Intangible Asset**

* A **trademark** is an **intangible asset** because it provides a legal right and future economic benefits.
* Once **registered**, the cost incurred to register the trademark (including legal fees) should be **capitalized** (i.e., recorded as an asset).

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### 2. **Valuation / Cost to be Recorded**

| Component | Treatment |
| -------------------------------------- | ------------------------------- |
| Registration fees (government) | Capitalized at actual cost |
| Legal expenses related to registration | Capitalized as part of the cost |
| Any other directly attributable costs | Capitalized |

> So, if legal expense was ₹10,000 related to successfully registering the trademark, add this to the registration fees and record the **total as the cost of the intangible asset**.

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### 3. **Amortization / Depreciation**

* Intangible assets like trademarks are **amortized over their useful life**.
* If the **useful life is indefinite** (e.g., a trademark that can be renewed indefinitely), **no amortization** is charged but impairment tests are done annually.
* If useful life is **finite**, amortize over that period (e.g., 10 years).

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### 4. **Journal Entry Example**

| Particulars | Debit (₹) | Credit (₹) |
| ---------------------------- | --------- | ---------- |
| Trademark (Intangible Asset) | 10,000 | |
| Cash / Bank | | 10,000 |

*(To capitalize legal expenses on trademark registration)*

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### 5. **Disclosure**

* Disclose the **intangible asset** and its amortization policy in notes to accounts.
* Periodically review for impairment.

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### Summary

| Question | Answer |
| ------------------------ | ------------------------------------------ |
| How to value trademark? | Capitalize all directly attributable costs |
| Legal expense treatment? | Include in asset cost |
| Amortization? | Over useful life or none if indefinite |

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Would you like a sample **amortization schedule** or **accounting policy note** for trademarks?

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