The costs that should be assigned to patents 1, 2, and 3, respectively, are =$480,000; $320,000; $160,000.
=Allocation ratio = 0.8 [$960,000 ÷ ($600,000 + $400,000 + $200,000)]. Allocations: 0.8 × $600,000; 0.8 × $400,000; 0.8 × $200,000.
Patent valuation is the process of determining the actual market cost of a patent or patent portfolio. Patent valuation is required when companies or inventors negotiate deals such as mergers, acquisitions, sales, or licensing of patents.
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