Fair Value Measurement of Patented Technologies: A Survey of the German Certified Accountants

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 accomplish 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 analyze the statements of the German CPAs with regard to intangible assets. Therefore we sent a standardized questionnaire to all 180 offices of the top ten (in terms of revenue) German auditing firms. Our results indicate 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 even will increase during the next few years. The mostly used valuation approach for the fair value measurement of patented technologies is the income approach. Furthermore, the accounting standards leave options for accounting policy – a result which casts doubt on the reliability and quality of financial statements. EFM classification code: 150, 210, 710 JEL-Classification: M40, O34