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9102013 Week 4 LT C Apollo Shoes Case S

Satisfactory Essays
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Hi Team C, you presented 2 Word files, including a certificate of originality, as well as a file containing a memo of audit conclusions for the audit of the fixed asset cycle, and a memo on prepaid assets and other asset conclusions, as well as leadsheets for fixed assets and prepaid assets. Your memo contained excellent conclusions, including inconsistencies in the useful life of real property, computer equipment, and production equipment. You noted inconsistencies in depreciation method for various asset categories based on Apollo Shoes accounting guidelines. Regarding R&D cost related to certain patents that had been capitalized, I agree with your conclusion that the patents should be expensed. You also had valid conclusions in …show more content…

In valuing Synergizer some students will attempt to expense the commission expense of $7,875.80, but this amount should be capitalized.
Investment Income should be tested in this section. See Step “Other Assets” #5.
The Phoneshoe patent should be written off since the company is no longer performing R&D.
Audit Program – Prepaids (E) and Other Assets (I) Audit Procedures
Audit
Objectives
W/P Ref.
Initials
Comments
Prepaids
1. Obtain a schedule of all prepaid expenses, deferred costs, and accrued expenses.
2. Determine whether each item is properly allocated to the current or future accounting periods.
3. Select significant additions to deferred and accrued amounts, and vouch them to supporting invoices, contracts, or calculations.
4. Determine the basis for deferral and accrual amounts, and vouch them to supporting invoices, contracts, or calculations.
5. Study the nature of each item, inquire of management, and determine whether the remaining balance will be recovered from future operations.
6. In other audit work on income and expenses be alert to notice items that should be considered prepaid, deferred, or accrued, and allocate to current or future accounting periods.
7. Scan the expense accounts in the trial balance and compare to prior year. Investigate unusual difference that may indicate failure to account for a prepaid or accrual item.
8. Study each item to determine the proper current of

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