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Intangible Assets

An auditor must focus on validating a company's rights to intangible assets like copyrights, trademarks, patents, and goodwill, as well as assessing whether the company's valuation of these assets without physical substance is reasonable. Some key intangible assets include copyrights which provide ownership of original creative works, trademarks which are unique names or symbols used in business, and patents which license inventions or designs. Goodwill represents the portion of a purchase price for a business that exceeds the fair market value of its tangible assets.

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37 views

Intangible Assets

An auditor must focus on validating a company's rights to intangible assets like copyrights, trademarks, patents, and goodwill, as well as assessing whether the company's valuation of these assets without physical substance is reasonable. Some key intangible assets include copyrights which provide ownership of original creative works, trademarks which are unique names or symbols used in business, and patents which license inventions or designs. Goodwill represents the portion of a purchase price for a business that exceeds the fair market value of its tangible assets.

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jhobs
Copyright
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Download as DOCX, PDF, TXT or read online on Scribd
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AUDIT OF INTANGIBLES

Intangible assets are the identifiable monetary assets without physical substance. Therefore, in auditing
an intangible asset, an auditor must focus on the right of the company over those assets and their
economic value, whether if the valuation made by the company on the intangibles was reasonable or
not. (PAS 38)

Some common Intangible Assets:

1. Copyrights – When a client owns a copyright, no one else can use its printed work (such as a
book) or its recorded work (such as a musical score or a movie) without permission. Any original
piece of work is automatically copyrighted.
2. Trademarks – These are unique signs, symbols, or names that your client uses. For example,
Kleenex is a trademark, and no other company that makes facial tissues can use that name.
3. Patents – Patents provide licensing for inventions or other unique processes and designs. Items
that can be protected by patents run the gamut from pharmaceuticals to automobile circuitry to
unique jewelry designs.
4. Goodwill – Goodwill comes into play only during the purchase of a business by another business
for a price greater than the fair market value of the net assets acquired during the sale. (Net
assets are total assets less total liabilities.)

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