Explanation of account titles and journal entry tips for trademark registration-related processing fees in Japanese accounting practice!

Accounting for costs associated with trademark applications to registration in Japan

How should I account for the cost of filing and registering a trademark? Unlike a tangible thing like a computer, it’s not something that has a form, but it doesn’t disappear like a service, so do we account for it as an “asset”?

That is correct.
Trademark rights are considered “intangible assets” that do not have any form among fixed assets, so they need to be recorded as “assets”. Some expenses can be ” deductable” depending on the size of the amount.

I didn’t know that. If I didn’t account for it properly, I’d end up paying more taxes than I should. But I have no idea what exactly to do…

In this article, we will explain in an easy-to-understand manner the points that need to be checked regarding accounting procedures related to trademarks.

Accounting for trademark rights

In accounting for trademark rights, the principles are as follows;

• Trademark rights are recorded as ” Intangible fixed assets” and are amortized over a useful life of 10 years.
• Amortization begins on the “registration date” and is depreciated using the “straight-line method”.

Exceptions based on amount and company size

As with other fixed assets, depending on the amount and the size of the company, it can be written off as a “lump-sum depreciable asset” or a “petty sum depreciable asset”. There is an advantage in saving tax if you write it off as a loss.

• Under the ” Special Provisions”, depreciable assets of less than 300,000 yen can be immediately depreciated up to 3 million yen. Currently (as of February 1, 2010), this rule is applicable until March 31, 2022.

Handling of consumption tax

Domestic trademark acquisitions fall under the category of “taxable transactions” and are eligible for purchase tax credits. On the other hand, please note that foreign trademark acquisitions are not subject to consumption tax.

If you do not file an application for trademark registration

If you do not file for trademark registration, the related costs will probably be amortized as “development costs”.

Items to be recorded as “assets” and items that can be recorded as “losses”

From application to registration, there are various expenses. The key point is to determine how much of the amount paid is to be recorded as “intangible fixed assets” as trademark rights.

Items that can be recorded as “losses”

Registration and license tax and other costs required for registration or registration are not required to be included in the acquisition cost of “intangible fixed assets”.
For example, the following expenses are covered.

• “Stamp fee” to be paid to the Patent Office when applying for or registering a trademark.
• Fees paid to patent attorneys (patent firms) for application and procedure services from trademark application to registration.

Items to be recorded as “assets”

“Intangible fixed assets” are defined as expenses directly incurred for business use or purchase.
For example, the following expenses are covered.

• The cost of creating a logo to be used as a trademark.
• The cost of a trademark search before filing a trademark application.

Accounts by timing and contents of expenses.

The following is a list of when to pay fees and what to spend for each step of the trademark process, from pre-filing to registration and renewal.

I didn’t know that. The accounting method changes depending on the amount and the size of the company, and the account item changes depending on the timing of the expense.

Conclusion

In this article, we have explained the accounting methods for trademark-related expenses, introducing information on account items and journal entries.
Since the appropriate method of treatment may vary depending on individual circumstances, we recommend that you consult with an accountant, tax accountant, or other specialists for details.