a. identify the potential audit problems that may be indicated by the schedule. b. to value the shares of Beta corporations, management has employed a securities valuation firm. Explain the audit considerations involved in auditing the value developed by the valuation firm.
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you are an auditor in charge of the audit of steffen corporation. in the audit of investments, you have just been given the following list of securities held by Steffens Corporation at December 31, 20x3.. 10000 shares of microsoft corp. market value $599,100. 6,000 shares of general motors corp. 216500. 8,000 shares of beta corporation (not publicly traded). 400 holloway lodging corp. 7.5% convertible bonds 555,000.
a. identify the potential audit problems that may be indicated by the schedule.
b. to value the shares of Beta corporations, management has employed a securities valuation firm. Explain the audit considerations involved in auditing the value developed by the valuation firm.
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- You were engaged by Black Clover Corporation, a publicly held company whose shares are traded on thePhilippine Stock Exchange, to conduct an audit of tis 20x2 financial statements. You were told by thecompany’s controller that there were numerous equity transactions that took place in 20x2. Theshareholders’ equity accounts at December 31, 20x1, had the following balances:Preference share capital, P100 par value, 6% cumulative; 10,000shares authorized; 6,000 shares issued and outstanding P600,000Ordinary share capital, P1 par value, 600,000 shares authorized;360,000 shares issued and outstanding 360,000Share premium 720,000Retained earnings 324,000Total shareholders’ equity P2,004,000You summarized the following equity transactions during 20x2 and other information relating to theshareholders’ equity in your working papers as follows:• January 6, 20x2 Issued 14,000 shares in exchange for land. On the date issued, the shares had amarket price of P16.50 per share. The land had a carrying…Monicker Co. engaged the audit firm of Gasner & Gasner to audit its financial statements that Monicker was going to use in connection with a public offering of its securities. Monicker's stock regularly trades on the NASDAQ. The audit was completed and the auditor issued an unqualified opinion on the financial statements, which Monicker submitted to the SEC along with the registration statement. Three hundred thousand shares of Monicker common stock were sold to the public at $13.50 per share. Eight months later, the stock fell to $2 per share when it was disclosed that several large loans to two "paper" companies owned by one of the directors were worthless. The loans were secured by the stock of the borrowing corporation and by Monicker stock owned by the director. These facts were not disclosed in the financial statements. The director and the two corporations are insolvent. Considering these facts, indicate whether each of the following statements is true or false, and briefly…Monicker Co. engaged the audit firm of Gasner & Gasner to audit its financial statements that Monicker was going to use in connection with a public offering of its securities. Monicker's stock regularly trades on the NASDAQ. The audit was completed and the auditor issued an unqualified opinion on the financial statements, which Monicker submitted to the SEC along with the registration statement. Three hundred thousand shares of Monicker common stock were sold to the public at $13.50 per share. Eight months later, the stock fell to $2 per share when it was disclosed that several large loans to two "paper" companies owned by one of the directors were worthless. The loans were secured by the stock of the borrowing corporation and by Monicker stock owned by the director. These facts were not disclosed in the financial statements. The director and the two corporations are insolvent. Considering these facts, indicate whether each of the following statements is true or false, and briefly…
- PLEASE ANSWER THIS QUESTION ASAP. THANK YOU SO MUCH. In connection with your audit of the financial statements of the Pin Shop Company for the year 2020, the following investment in Ordinary shares and dividend income accounts were presented to you: Investment in ordinary shares Date Description Ref. Debit Credit 01/15 10,000 O/S, par value P75, SPIKES CO. VR-18 585,000 04/30 5,000 shares SPIKES Co. received as share div. CJ-7 375,000 05/20 Sold 5,000 shares @ P37.5 CR-21 187,500 12/10 Sold 2,000 shares @ P90 CR-S2 180,000 Dividend Income Date Description Ref. Debit Credit 04/30 Share Dividend…PLEASE ANSWER THIS QUESTION ASAP. THANK YOU SO MUCH. In connection with your audit of the financial statements of the Pin Shop Company for the year 2020, the following investment in Ordinary shares and dividend income accounts were presented to you: Investment in ordinary shares Date Description Ref. Debit Credit 01/15 10,000 O/S, par value P75, SPIKES CO. VR-18 585,000 04/30 5,000 shares SPIKES Co. received as share div. CJ-7 375,000 05/20 Sold 5,000 shares @ P37.5 CR-21 187,500 12/10 Sold 2,000 shares @ P90 CR-S2 180,000 Dividend Income Date Description Ref. Debit Credit 04/30 Share Dividend…PLEASE ANSWER THIS QUESTION ASAP. THANK YOU SO MUCH. In connection with your audit of the financial statements of the Pin Shop Company for the year 2020, the following investment in Ordinary shares and dividend income accounts were presented to you: Investment in ordinary shares Date Description Ref. Debit Credit 01/15 10,000 O/S, par value P75, SPIKES CO. VR-18 585,000 04/30 5,000 shares SPIKES Co. received as share div. CJ-7 375,000 05/20 Sold 5,000 shares @ P37.5 CR-21 187,500 12/10 Sold 2,000 shares @ P90 CR-S2 180,000 Dividend Income Date Description Ref. Debit Credit 04/30 Share Dividend…
- As auditor for Chrisley and Dale Associates, you have been assigned to check McKessonCorporation’s computation of earnings per share for the current year. The financial controller has supplied you with the following computations. Net Income $6,800,000Ordinary shares issued and outstanding:Beginning of year 650,000End of year 4,000,000Average 2,325,000Earnings per share calculation:$6,800,000 = $2.922,325,000You have gathered the following information:On January 1, 2020, McKesson Corp. issued 650,000 shares. Additional issues of shares for the year were as follows:April 1 150,000 shares.May 1 A 20% share dividendAugust 1 700,000 shares.September 1 340,000 shares.November 1 A 2 for 1 share splitAll 4,000,000 shares were outstanding at December 31, 2020.On January 1, 10% convertible debentures, $60,000,000 face value, were issued at par. Each $1,000 debenture is convertible into 40 ordinary shares. The interest expense for the current year related to the liability component of the…You were engage by Blank Space Corporation, a publicly held company whose shares are traded on the Philippine Stock Exchange, to conduct an audit of its financial statements. You were told by the company’s controller that there were numerous equity transactions that took place in 2021. The shareholders’ equity accounts at December 31, 2020 had the following balances: Share capital- Preference, P100 par value, 6 % cumulative; 30,000 shares authorized; 18,000 shares issued and outstanding P1,800,000Share capital-Ordinary, P1 par value, 1,800,000 share authorized 1,200,000 shares issued and outstanding 1,200,000Share premium 2,400,000Retained Earnings…During your audit of Esau Corporation for the year 2021, you found the following postings to the FVPL account: Date Particulars Debit Credit Jan. 1 Purchased 10,000 preference shares of F Company P100,000 Jan. 3 Purchased 1,000 shares of A Company 54,000 Jan. 8 Purchased 1,000 shares of B Company 60,000 Feb. 28 Cash dividends, F Company 20,000 Apr. 2 Cash dividends, A Company 1,000 Apr. 5 Sold 500 shares, A Company 28,000 Apr. 8 Purchased 1,000 shares of C Company 30,000 Purchased 1,000 shares of D Company 36,000 July 15 Purchased 200 shares, Esau Company 33,000 Purchased 500 shares of E Company 20,000 Aug. 15 Sold 100 shares, Esau Company 20,000 Dec. 8 Received 10% bonus issue from E Corporation 2,000 Dec. 10 Cash dividend, C Company 1,200 The following information was discovered from your audit procedures: The cash dividends received…
- You are engaged to perform the first audit of the Torrents Company for the year ended December 31, 2022. You find the following account balances related to shareholders' equity: Preference shares, P100 par P3,000,000 Ordinary Shares, P10 par 6,500,000 Capital Surplus (1,640,000) Retained Earnings 15,000,000 Due to the antiquated terminology and negative balance, you examine the Capitak Surplus account first and find in it the following entries: Credit/(Debit) Premium on Ordinary Shares P2,710,000 Capital from donated land 1,600,000 Treasury shares (50,000 ordinary shares at cost) (750,000) Premium on Preference Shares 300,000 Appropriation for contingencies 2,500,000 Share dividend issued (50%) (2,000,000) Prior period adjustment (net of income taxes) (1,200,000) Loss from the fire (uninsured), 2022 (1,800,000) Property dividend distributed (600,000) Cash dividends declared to be paid in 2023 (2,400,000) Balance (P1,640,000) Your examination of…You are engaged to perform the first audit of the Torrents Company for the year ended December 31, 2022. You find the following account balances related to shareholders' equity: Preference shares, P100 par P3,000,000 Ordinary Shares, P10 par 6,500,000 Capital Surplus (1,640,000) Retained Earnings 15,000,000 Due to the antiquated terminology and negative balance, you examine the Capitak Surplus account first and find in it the following entries: Credit/(Debit) Premium on Ordinary Shares P2,710,000 Capital from donated land 1,600,000 Treasury shares (50,000 ordinary shares at cost) (750,000) Premium on Preference Shares 300,000 Appropriation for contingencies 2,500,000 Share dividend issued (50%) (2,000,000) Prior period adjustment (net of income taxes) (1,200,000) Loss from the fire (uninsured), 2022 (1,800,000) Property dividend distributed (600,000) Cash dividends declared to be paid in 2023 (2,400,000) Balance (P1,640,000) Your examination of…You have reviewed the work performed by your assistant, Raymond Snow, on the audit of Tin Ltd for the year ended 30 June 20X8 and you have noted the following two independent matters:(i) In testing investments in listed securities, Raymond selected all shareholdings with a market value above $200,000 and checked them to the closing market value reported by the Australian Stock Exchange (ASX) to determine the net realisable value of each shareholding. The items tested totaled $5,500,000 or 60% of the total balance. Of the items tested, only one error of $110,000 was discovered. Raymond concluded that the error was not itself material, as it was only 2% of the balance tested. He extrapolated this error to the total population and estimated that the error for the total population would be $185,000, which was also immaterial. Therefore, he concluded that the investments in listed securities were fairly stated at the lower of cost or net realisable value.(ii) Tin Ltd has 1,000 stock lines…