Trademark - treatment in books

This query is : Resolved

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)
Follow

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

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
Follow

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

---

## ✅ 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).

---

### 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**.

---

### 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).

---

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

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

*(To capitalize legal expenses on trademark registration)*

---

### 5. **Disclosure**

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

---

### 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 |

---

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

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now