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The normal treatment of litigation costs to successfully defend an intangible right under U.S. GAAP and International Financial Reporting Standards (IFRS), respectively, is: U.S. GAAP IFRS a. Capitalize Expense b. Capitalize Capitalize c. Expense Capitalize d. Expense Expense

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Answer:

The answer is b. U.S GAAP Capitalized, IFRS Capitalized.

That is, under either U.S GAAP or IFRS, the successful litigation costs are capitalized.

Explanation:

In terms of treatment to litigation costs incurred for defending rights over intangible assets ( e.g: patent, copyright...), there is no differences between IFRS ( IFRS 38 Intangible asset) and US GAAP.

In general, the treatment for these type of costs under both IFRS and US GAAP are as followed:

- Successful litigation costs are capitalized;

- Unsuccessful litigation costs are expenses.

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