What is an appropriate procedure when testing intangibles for amortization?

Recalculating amortization for a sample of intangibles is a sound procedure when testing intangibles for amortization because it directly verifies the accuracy of the amounts reported in the financial statements. This process involves checking that the amortization expenses are calculated correctly based on the intangible assets' useful lives and the methods prescribed by applicable accounting standards.

This approach allows the auditor to ensure that the calculations align with the underlying agreements and assumptions used by the entity. Specifically, by sampling, the auditor can make reasonable inferences about the whole population of intangible assets without needing to examine every single item. This procedure enhances the reliability of the financial statements by confirming that amortization is recognized appropriately over the expected useful life of the assets.

In contrast, relying solely on managerial estimates does not involve independent verification and can lead to inaccuracies if estimates are overly optimistic or biased. Limiting calculations to only recent transactions provides an incomplete view and may miss pertinent historical data necessary for assessing the amortization of older intangible assets. Finally, focusing only on past amortization policies could overlook significant changes in circumstances or accounting standards that affect the current amortization process, leading to potential misstatements in the financial records.