Lakeside Auditing

728 WordsNov 5, 20143 Pages
Exercises Exercise 1 Following his discussion with Rogers, Andrews talked briefly with Carole Mitchell concerning the warehouse expansion. She indicated that Art Heyman had already prepared an analysis of the repairs and Maintenance account (see Exhibit 9-4). In addition, based on the debits to the Warehouse account (see Exhibit 9-5) he had located the invoices substantiating the capitalized transactions (see Exhibit 9-7) while reviewing the invoices received by Lakeside subsequent to the end of 2012. Perform the necessary steps to test the warehouse account (#111-1) and document your procedures on an audit document similar to the one in Exhibit 9-4. Indicate and prepare on the audit document any proposed correcting entries that are…show more content…
Exercise 2 Despite Rogers’ assurances, Store 6 could still be closed down, resulting in a large loss to Lakeside. The audit opinion was qualified in the previous year, and the situation has not changed significantly. Perform an impairment test given the information available. What should Abernethy and Chapman do now in connection with the uncertainty involved with Store 6? Should Abernethy and Chapman give a similar opinion this year to protect the firm from potential liability? (Hint: information for this question makes use of information from Case 3 and Case 7). Lakeside Company Impairment Test – Store 6 December 31, 2012 Prepared by: KB Date: 11/05/2014 Instructions: Using the two-step approach, perform an impairment test given the information available. Step One: Recoverability Test Source of Information | | Future Cash Flows | | Book Value | | Difference | | Is impairment indicated? | | Step Two: Measurement of Impairment Source of Information | | Market Value of Asset | | Book Value of Asset | | Impairment Amount | | Audit Objective: Scope: Audit Procedures: Comments: Recommended Adjustment: Audit Conclusion: Note: See FASB 60-10-35-17 Statement of Financial Accounting Standards No.

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