It is gold with the requisite buttons to alter the tune of it. It looks much like an average clarinet.
Role in comic
SpongeBob reads the latest Mermaid Man and Barnacle Boy comic book to Squidward. After Squidward tells SpongeBob to stop, SpongeBob mentions it when he asks "So you don't want to hear how Poseidon's golden clarinet saves the day?," but Squidward does not hear him, and says "No!"
He then realizes what he said, but it is too late and SpongeBob walks away. Squidward then spends the rest of the day thinking about it. He then sneaks into SpongeBob's house at night and tries to steal the comics, but there is an alarm on the comic box, and Mermaid Man and Barnacle Boy enter SpongeBob's bedroom and arrest Squidward.
Some amount of time later, at the Bikini Bottom Jail, SpongeBob finishes reading his comic to Squidward. In the comic, a blue whale uses the golden clarinet to destroy the Gill-Nullifying Collar, which was why Mermaid Man needed saving.