What type of patent does not appear on a company's balance sheet?

The type of patent that does not appear on a company's balance sheet is an internally developed patent. This stems from the accounting principles that govern how different assets are recognized and recorded. Internally developed patents are often not capitalized as assets on the balance sheet because the costs associated with their development, such as research and development expenditures, are usually expensed as incurred under generally accepted accounting principles (GAAP). Consequently, these costs do not increase the company's asset base in the way that purchased patents do.

In contrast, purchased patents are recorded as intangible assets on the balance sheet at their acquisition cost, recognizing the economic value they bring to the company. Intangible assets, as a broader category, include items like trademarks and goodwill, which are also recorded depending on their nature. Current liabilities represent obligations due to be settled within a year and are not related to patents, whether purchased or developed.

This distinction highlights the importance of understanding how different assets are treated under accounting standards, specifically regarding their recognition and the criteria that determine capitalizing versus expensing costs associated with their creation.