Is Your Business Reporting All of Its Assets?

A Balance Sheet is supposed to accurately reflect the value of your business, but there are many instances in which key corporate assets are NOT included in the company’s Balance Sheet. Because of the unusual process in which patents come into existence, the fair market value of patents owned by a business often do NOT appear on the company Balance Sheet.

 

A business comes up with an idea for a new technology, so it files a patent application for the new technology. It probably engages a patent attorney to file the application, and two or three years later a patent is granted. Congratulations. But here is what does not occur: There is NO accounting transaction that records the acquisition of that patent or the value of that transaction!

 

When a company buys a truck – as just one example – an accounting transaction occurs that takes funds out of Cash and adds the value of the acquired truck to the Equipment line under Property and Equipment. But when a company applies for an receives a patent, there is NO accounting transaction. The filing fees and attorney fees for the patent application are not assets. They are expenses that are properly written off in the year they are expended. So, when that patent is granted, it is most definitely an asset, but not one that appears on the company Balance Sheet automatically as other assets do.

 

Adding the value of its patents to its Balance Sheet increases the company’s value. And a company with greater value has easier access to financing. It is much easier for a start-up business to raise venture capital or other financing if the value of its patents is reflected on its Balance Sheet. Adding the value of its patents to the Balance Sheet of a publicly held company can do wonders for the company’s stock price. And let’s face it, any company’s Balance Sheet should accurately reflect all of a company’s assets as well as its liabilities.

 

If you represent a company that has home-grown patents, and those patents are not reflected on your Balance Sheet, the time has come to have a professional patent valuation performed so their value can be accurately reflected on the company Balance Sheet.

 

IPOfferings is a leading patent broker. In addition to patent valuation services, IPOfferings also provides IP consulting and patent enforcement services. IPOfferings lists in its Patent MarketPlace the patents for sale that is represents.

 

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