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Essay / Research Paper Abstract
This 4 page paper looks at case supplied by the student. The company has used transfers between different companies to create goodwill which is being used to hide $7 million losses. The paper considers disposition from the auditors perspective and looks at the way in which the intangible assets including goodwill, can be tested and measured during the audit process in order to give a fair picture of the company. The bibliography cites 3 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEaudintan.rtf
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Unformatted sample text from the term paper:
can be placed on the balance sheet as an intangible asset. The transaction cycles such as this there are some inherent risks. The incestuous nature of the relationship between companies
is one which is able to obscure the real value of the transaction. In this case has been the avoidance of writing off $7 million due to the overstatement of
assets. Internal transactions always need to be considered more carefully than those with external parties as the way that the intangible assets are valued is not necessarily with any reference
to a fair market value; in many cases the transactions may involve assets which cannot be valued with reference to the market as they are not on the market. This
may be argued as relevant with reference to the goodwill which is transferred between companies as well is the different stocks and notes which are given in return for some
the transactions. Accounted for intangible assets has always been a controversial issue, therefore testing can also be difficult and controversial due to the nature of intangibility. The system of auditing
has been put into place to try and ensure that the reports put forward by directors of companies are true and fair. It is only by auditing that the real
value when auditing is undertaken tests need to be put into place to ensure that values reported fair. Overstating of assets has been used effectively as a tool in the
past to hide losses and to disguise financial weaknesses. When looking at intangible assets such as goodwill as well a stocks and shares
the accounting standards which needs to be referenced is that of FASB 142. This concerns the reporting of valuation on intangible assets (Mueller, 2004). It is important that this is
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