1. In auditing intangible assets, an auditor most likely would obtain evidence of ownership or supporting documentations in support of management's financial statement assertion of: a. Completeness. b. Presentation and disclosure. c. Rights and obligations. d. Existence or occurrence. 2. When an internally generated asset meets the recognition criteria the appropriate treatment for costs previously expensed is: a. Include in the cost of the development of the asset. b. No adjustment as these amounts may not be reinstated. c. Capitalize into the cost of the asset and adjust the opening balance of retained earnings. d. Reinstatement 3. In auditing intangible assets, an auditor most likely reviews or recomputed amortization and determine whether the amortization period is reasonable in support of management's financial statement assertion of a. Rights and obligations b. Existence or occurrence c. Valuation d. Completeness 4. 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. Existence or occurrence b. Completeness c. Valuation and allocation d. Rights and obligations 5. In connection with the audit of the prepaid insurance account, which of the following procedures is usually not performed by the auditor? a. Confirm premium rates with an independent insurance broker b. Recomputed the portion of the premium that expired during the year c. Prepare excerpts of the insurance policies for audit documentation d. Examine support for premium payments 6. 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. Completeness. b. Valuation. c. Rights and obligations. d. Existence or occurrence. 7. In evaluating control risk and effectiveness for intangible assets, controls should be designed for numerous purposes. Which of the following is not a usual control for intangible assets? a. All of the above are usual controls for intangible assets. b. Ensures that decisions are appropriately made as to when to capitalize or expense research and development expenditures. c. Identify and account for intangible asset impairment. d. Develop amortization schedules that reflect the remaining useful life of patents or copyrights associated with the assets. 8. There is goodwill involved in the acquisition of a business if the purchase price paid is in excess of the normal or usual return for the industry as a whole but such goodwill is not recorder if it has not been purchased or paid for. a. False; True. b. True; True. c. False; False. d. True; False. 9. The most effective means for the' auditor to determine whether a recorded intangible asset possesses the characteristics of an asset is to a. Vouch the purchase by reference to underlying documentation. b. Inquire as to the status of patent applications. c. Analyze research and development expenditures to determine that only those expenditures possessing future economic benefit have been capitalized. d. Evaluate the future revenue-producing capacity of the intangible asset.
10. There is goodwill involved in the acquisition of a business if the purchase price paid is in excess of the proprietorship of the business acquired. Goodwill might be viewed as the enjoyment of a profit by a company in excess of the normal or usual return for the industry as a whole but such goodwill is not recorded if it has not been purchased or paid for. a. True; False. b. False; True. c. True; True. d. False; False. 11. The most likely technique for the current year audit of goodwill which was acquired three years ago by a continuing audit client. a. Confirmation b. Inquiry c. Re-computation d. Observation 12. The most effective means for the auditor to determine whether a recorded intangible asset possesses the characteristics of an asset is to a. Inquire as to the status of patent applications. b. Analyze research and development expenditures to determine that only those expenditures possessing future economic benefit have been capitalized. c. Evaluate the future revenue-producing capacity of the intangible asset. d. Vouch the purchase by reference to underlying documentation.
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