Too basic? Expense or Asset?

Did you get your answer yet?

No, not yet. 
I hope someone can answer this…

@pianomonology 

The $10K needs to be removed from General Corp./IP Costs and reclassified as Prepaid Legal Expenses (other current asset).  The proper entry amounts depend on how you allocated the $90K between General Corp. and IP Costs.  

I would create a $0 Expense transaction (New > Expense).  On line 1, enter Prepaid Legal Expenses for $10K, and on lines 2/3, enter General Corp./IP Costs as negative amounts totalling -$10K to bring those overstated expense accounts down to the appropriate $70K/10K split.  

You can enter this using a journal entry (JE) too but an Expense transaction works better in QBO IMO.  The JE would be a debit to Prepaid Legal Expenses for $10K and credits to General Corp./IP Costs.

Your original post stated that you were charged $100K in legal expenses but your post indicates you paid $90K split between $70K IP, $10K General Corp., and $10K to Prepaid Legal Expenses.  Where is the remaining $10K? 

I feel like I didn't quite explain it clearly so let me try again.

The idea is this company was invoiced $100k ($80k IP, $20k Gen Corp) but they only paid $90k with whatever the reasons.

The payer company entered $90k in QBO as General Corp legal expense ($10k) and IP expense ($70k) accounts.

The payee company (Attorney firm) didn't apply the $10k to the open invoice for some reasons.   The payer company didn't know what to do with the unapplied $10k so it was just left in Legal expense account (General Corp and IP are sub accounts of this).  So all $90k were entered in expense accounts.

At the end of year, $10k which was not entered as a bill because payer company didn't pay in order to reflect their debt.  The $70k worth of IP expenses should be intangible asset.

- How should I be entering the IP asset account?

- All $70k?

- If not, how do you determine the asset $ amount?

- Is that to be entered in $70k debit in Intangible asset account and credit in AccountsPayable?