How to Record Unallowable Patent Infringement
Records the payment of damages resulting from patent infringement which are deemed unallowable under FAR 31.205-28.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable Legal Damages - Patent Infringement | Expense | 150,000.00 | - |
| Cash | Asset | - | 150,000.00 |
💡 Accountant's Note
Under FAR 31.205-28, costs of infringement of patents are unallowable unless otherwise provided for in the contract. These must be segregated in unallowable accounts for indirect rate calculations.
Practitioner & Systems Framework
💻 ERP Architecture
Use a unique cost element or account range specifically for unallowable legal settlements to ensure exclusion from the G&A pool.
⚠️ Audit Flags
Settlement agreements appearing in legal fee reviews during DCAA audits.
📄 Required Documentation
Court order, settlement agreement, and proof of payment.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
Related Journal Entries
Defense, Aerospace & Government Contracting
Cost-Plus-Fixed-Fee (CPFF) Contract — Revenue Recognition as Costs Are Incurred
Defense, Aerospace & Government Contracting
Firm Fixed-Price (FFP) Contract — Cost-to-Cost Percentage of Completion Revenue
Defense, Aerospace & Government Contracting
Time & Materials (T&M) Contract — Revenue at Contractual Labor Rates Plus Material Cost
Discussion & Community Questions
Loading comments...