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How should an auditor analyse the Intangible as...

How should an auditor analyse the Intangible assets, lying in the books of the organization being...

How should an auditor analyse the Intangible assets, lying in the books of the organization being audited?

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Chiranjibi Chapagain Mar. 09, 2018

An intangible asset is an identifiable non-monetary asset, without physical substance, held for use in the production or supply of goods or services, for rental to others, or for administrative purposes. These assets include rights and benefit to owners subject to their being useful. For example: goodwill, patents, copyright etc.

AS 26, “Intangible Assets”, applies to, among other things, expenditure on advertising, training, start-up, research and development activities.

Research and development activities are directed to the development of knowledge. Therefore, although these activities may result in an asset with physical substance (for example, a prototype), the physical element of the asset is secondary to its intangible component, that is the knowledge embodied in it.

This standard also applies to rights under licensing agreements for items such as motion picture films, video recordings, plays, manuscripts, patents and copyrights. An intangible asset should be measured at cost. After initial recognition an intangible asset should be carried at its cost less any accumulated amortisation and any impairment losses.

Auditor should also ensure that proper disclosure is made in the financial statements about the carrying amount, amortisation methods, useful lives, etc.

How should an auditor analyse the Intangible assets, lying in the books of the organization being audited?

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