In examining the books of Samson Manufacturing Company, you find on the December 31, 2007 balance sheet the item, “Costs of patents, $308,440.” Referring to the ledger accounts, you note the following items regarding one patent acquired in 2004:
2004 Legal costs incurred in defending the
validity of the patent $3,500
2006 Legal costs in prosecuting an
infringement suit 7,900
2006 Legal costs (additional expenses) in
the infringement suit 1,500
2006 Cost of improvements (unpatented)
on the patented device 4,800

There are no credits in the account, and the company has not recorded any amortization for any of the patents. There are three other patents issued in 2001, 2003, and 2004; all were developed by the staff of the client. The patented articles are presently very marketable, but are estimated to be in demand only for the next few years.

Required
Discuss the items included in the Patent account from an accounting standpoint.