• To ensure that the assets were in existence on the date of the balance sheet.
  • The assets had been acquired for the purpose of the business and under proper authority.
  • The right of ownership of the assets vested in or belonged to the undertaking.
  • To verify that they are free from charges or mortgage.
  • To satisfy himself that they are properly valued having regard in their physical condition.
  • To ensure that their values are correctly and clearly disclosed in the balance sheet.

AUDITOR’S RESPONSIBILITY TOWARDS VALUATION OF ASSETS:- It must be borne in mind that the actual valuations are made by the proprietor’s or official of the concern who have a practical knowledge of such assets, and that an auditor’s duty is confined to testing the valuation as far as he can.

Thus, the auditor has to take the following steps for the valuation of various assets:-

  • He should obtain all the information for the valuations of assets.
  • He should test the values of various assets which have been already determined by the management.
  • He should ascertain that the values have been determined on the basis of generally accepted principles of accounting.
  • He should ascertain that the same basis of valuation have been followed from year to year.
  • He should seek the help of technical personnel, if necessary to determine the value of any particular asset.
  • Then he should give the opinion regarding the accuracy of the value of the assets.

Auditor may be held liable for incorrect valuation and that there was failure on his part to exercise the quality of judgment reasonably associated with a person in a skilled profession.


  • Cost Price:– Amount paid for acquisition of assets.
  • Market Price:- Price at which particular assets can be sold in market.
  • Book Value:– It is a value at which an asset appears in the books of accounts. It is usually cost less depreciation.
  • Replacement Value:- Price at which asset can be replaced.
  • Scrap Value:– A value which may be obtained from the assets if it is sold as scrap.
  • Going Concern Value:- It is known as historical value. It is cost less reasonable amount of depreciation written off.

POINTS TO BE CONSIDERED IN THE VALUATION OF ASSETS:- Following point should be considered while doing the valuation of assets:-

  • The original cost of the assets.
  • The probable working life of the assets.
  • The break-up value of the assets.
  • Wear and tear charge of the assets.
  • The chances of being obsolete of the assets.


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