December 27, 2021

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. Enterprises frequently expend resources, or incur liabilities, on the acquisition, development, maintenance or enhancement of intangible resources such as scientific or technical knowledge, design […]

If the building has been built or is in the course of construction, under a contract the auditor should verify the debit balance of the account by reference to the architect’s certificate, as well as the contractor’s receipts for amounts paid. If the building has been constructed by the client’s own organisation, it will be

Various steps involved in the verification of leasehold rights are stated below : Inspect the lease or assignment thereof to ascertain the amount of premium, if any, for securing the lease, and its terms and conditions; and that the lease has been duly registered. A lease exceeding one year is not valid unless it has

Land and Buildings Sometimes the two assets are shown together in the Balance Sheet. Nevertheless, their ledger accounts should always be separated particularly in view of the fact that buildings are subject to depreciation while land in general is not. The land holdings should be verified by an inspection of the original title deed to

1.  Clause 4(i) of CARO, 2003 requires the auditor to comment whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets. What constitutes proper records is a matter of professional judgment made by the auditor after considering the facts and circumstances of each case. It is necessary

The Guidance Note on Audit of Fixed Assets issued by the ICAI recommends that the verification of fixed assets consists of examination of related records and physical verification. The auditor should normally verify the records with reference to the documentary evidence and by evaluation of internal controls. The verification of records would include verifying the

(1) Where a company or a partnership has taken over the assets of a going concern, the agreement of sale should be inspected and that amount paid for them ascertained. It should be further verified that the allocation of the total cost among the various assets is fair and reasonable. (2) The cost of assets

Fixed assets are acquired for purpose of business with the object of earning revenue in the ordinary course of business ; these are intended to be used and not sold, e.g., land, building, machinery, etc. Almost all fixed assets (except land and goodwill) suffer depletion or exhaustion due to efflux of time and their use

General Principles Verification of assets is an important audit process : by convention its scope has been limited to inspection of assets, where it is practicable, and collection of information about them on an examination of documentary and other evidence so as to confirm :  that the assets were in existence on the date of

A specific reserve is created for some definite purpose out of the profits of the company. The purpose may be any thing connected with the business which the Article of Association or the directors want to be provided for, such as dividend equalisation, replacement of fixed assets, expansion of the organisation, income-tax liability of the

Reserves are amounts appropriated out of profits which are not intended to meet any liability, contingency, commitment or diminution in the value of assets known to exist at the date of the Balance Sheet. In contradistinction, provisions are amounts charged against revenue to provide for:  depreciation, renewal or diminution in the value of assets; or

Beside charging annual depreciation on assets by the reason of normal wear and tear, afflux ion of time and obsolescence to re-instate the correct value of the assets considering the future cash flows that then asset can generate, impairment loss needs to be provided. The difference between the carrying amount of an asset and recoverable