Fair Value Measurement of Patented Technologies a Survey of German Certified Accountants

Abstract

Intangible assets are regarded as the future value drivers of company performance. The increased economic importance requires an intensified analyst and investor awareness of (reported) intangible assets and their financial reporting quality. However, hardly anything is known about the actual importance and influence of different intangible asset classes in different industries. To fill this gap, we performed a survey among the German Certified Public Accountants (CPAs) concerning intangible assets with a focus on patented technologies in order to determine the influence of intangible assets. We analysed the statements of the German CPAs with regards to intangible assets and sent a standardised questionnaire to all 180 offices of the top 10 (in terms of revenue) German auditing firms. Our results indicated that intangible assets have gained in importance. According to the German CPAs, the current influence of intangible assets on company performance is on a high level and will even increase during the next few years. The most widely-used valuation approach for the fair value measurement of patented technologies is the income approach. Further, the accounting standards leave options for accounting policy – a result which casts doubt on the reliability and quality of financial statements.

Keywords: finance, law

JEL Classification: M40, M41