AUDIT OF INTANGIBLES Flashcards
(5 cards)
The most effective means for the auditor to determine whether a recorded intangible asset
possesses the characteristics of an asset is
A. Vouch the purchase by reference to underlying documentation.
B. Inquire as to the status of patent application.
C. Evaluate the future revenue-producing capacity of the intangible asset.
D. Analyze the research and development expenditures to determine that only those
expenditures possessing future economic benefit have been capitalized.
C
In auditing intangible assets, an auditor most likely would review or recompute amortization
and determine whether the amortization period is reasonable in support of management’s
financial statement assertion of
A. Valuation C. Completeness
B. Existence D. Rights and obligations
A
Assuming TLL has capitalized all research and development costs associated with patent.
York, CPA, who is examining this account will probably
A. Confer with management regarding transfer of the amount from the balance sheet to
the income statement.
B. Confirm that the patent is registered and on file with the intellectual property office.
C. Confer with management regarding a change in the title of the account to “goodwill.”
D. Confer with management regarding ownership of the patent.
A
Which of the following comparisons would be the most appropriate audit test for the amount
of recorded goodwill?
A. The purchase price and the book value of net tangible and identifiable assets purchased.
B. The purchase price and the fair value of net tangible and identifiable assets purchased.
C. The figure for goodwill specified in the contract of purchase.
D. Earnings in excess of 5% of net assets for the past five years.
B
A corporate balance sheet indicates that one of the corporate assets is a patent. An
auditor will most likely obtain evidence regarding the continuing validity and existence of
this patent by obtaining a written representation from
A. A patent attorney. C. The patent inventor.
B. The SEC. D. The patent owner.
A
