audit risk to be consider in planning audit and audit procedures
Q: Which of the following best describes the auditors' typical observation of plant and equipment?…
A: Audit of Plant & Equipment: In the audit of every item we check the material amount of…
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A: Loss from Derecognition = Cost of the assets - Accumulated Depreciation
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A: Depreciation means the loss in value of assets because of usage of assets , passage of time or…
Q: ems of equipment from the accounting records and then attempt to locate them during the plant tour.…
A: Auditor refers to an individual whose job is to identify and check all the records of a company.
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Q: To what extent do you consider the following items to be proper costs of the fixed asset? Give…
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Q: According to IAS 38 Intangible Assets, which of the following types of research and development…
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A: 1. 2.
Q: Tonkawa Company purchased land for use as its corporate headquarters. A small factory that was on…
A: Given information is: Tonkawa Company purchased land for use as its corporate headquarters. A small…
Q: Nizwa Company bought an equipment for manufacturing tube lights and the company management requested…
A: Depreciation: Depreciation is an estimation of the declining value of the assets over their useful…
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Q: Provisions shall be recognized for all of the following, except
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Q: audit risk
A: Audit risk is outlined as 'the risk that the auditor is Associate in Nursing applicable audit…
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Q: he policy that for any new piece of equipment the annual depreciation cost should not exceed 10% of…
A: The formula for straight line depreciation is as follows: Annual depreciation cost = (cost of the…
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A: Ethical issues refer to a situation wherein a person or an entity is required to choose between the…
Q: For every of the following independent situation, discuss the issue and describe the impact on the…
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A: "Since you have asked multiple question we will solve the first question for you. If you want any…
Q: In the examination of property, plant, and equipment, the auditor tries to determine all of the…
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A: Impairment of assets: Impairment of the asset arises when the current market value of the asset…
Q: PPE disclosure
A: Disclosures for PPE Measurement basis Depreciation method Estimated useful lives or equivalent…
Q: Which of the following statements is (are) correct?a. Accumulated depreciation represents a cash…
A: Depreciation: Depreciation is the process of reduction in the cost of Asset due to use and wear and…
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It is assumed that this year the company also changed the location of the production line to a new factory. One of the conditions that allows production in the new factory is that company must, at the end of the useful life of factory, dismantle the factory and repair any environmental damage caused to the land on which it is situated.
Require: For this information, identify the audit risk to be consider in planning audit and
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- identify the audit risk to be considered in planning audit and audit procedures to respond to these below risks. It is assumed that this year the company also changed the location of the production line to a new factory. One of the conditions that allow production in the new factory is that the company must, at the end of the useful life of the factory, dismantle the factory and repair any environmental damage caused to the land on which it is situated.You were assigned to audit the Property, plant and equipment account of your continuing audit client Lolita Corp. for the period ended December 31, 2021. The PPE file in the permanent working paper and in the prior year working paper included the following schedule: All assets were acquired at the inception of operations at the beginning of 2019 and are being depreciated through the following policies: Office Building – Double-declining balance over 20 years (10% salvage value based on cost) Factory Building – SYD over 15 years (10% salvage value based on cost) Office Equipment – Straight-line method over 8 years (no salvage value) Factory Machineries – SYD over 10 years (10% salvage value based on cost) Transactions for 2021 were as follows: An new elevator system costing P800,000 was installed on the company’s Office Building and was completed in early January. On March 31, the company traded a new factory machinery with a cash…You were assigned to audit the Property, plant and equipment account of your continuing audit client Lolita Corp. for the period ended December 31, 2021. The PPE file in the permanent working paper and in the prior year working paper included the following schedule: All assets were acquired at the inception of operations at the beginning of 2019 and are being depreciated through the following policies: Office Building – Double-declining balance over 20 years (10% salvage value based on cost) Factory Building – SYD over 15 years (10% salvage value based on cost) Office Equipment – Straight-line method over 8 years (no salvage value) Factory Machineries – SYD over 10 years (10% salvage value based on cost) Transactions for 2021 were as follows: An new elevator system costing P800,000 was installed on the company’s Office Building and was completed in early January. On March 31, the company traded a new factory machinery with a cash…
- During the audit of Company XYZ, John Doe, the plant manager tells you that the company purchased and an equipment at the beginning of the year that is currently being used in the factory. The equipment was recorded at cost. The manager asks you, now that we are using the machine in our production do we need to any additional accounting for the machine? Using the related GAAP and prepare a memo to the president that summarizes how to record, and the machine used in the factory.The review of minutes and confirmation letter obtained from the legal counsel of the company revealed the following information: • EMPLEO has been named a liable party for toxic waste cleanup on its land, and must pay an as-yet undetermined amount for environmental remediation activities. An adjoining land owner, Clear Toothpaste Company, sold its property because of possible toxic contamination of the water supply and resulting potential adverse public reaction towards its product. Clear Toothpaste sued EMPLEO for damages. There is reasonable possibility that Clear Toothpaste will prevail and be awarded between P250,000 and P600,000. o EMPLEO is also the defendant of a lawsuit on an incident involving an accidental crash by its company car to another vehicle. In your inspection of the letter obtained from its legal counsel, they believe that the company would be liable to pay damages amounting to P300,000, but it is also possible that it will pay up to P500,000. Question: How much…For each of the following misstatements in property, plant, andequipment accounts, state an internal control that the client can implement to preventthe misstatement from occurring and a substantive audit procedure that the auditor canuse to discover the misstatement:1. Computer equipment that is abandoned or traded for replacement equipment isnot removed from the accounting records.2. Depreciation expense for manufacturing operations is charged to administrativeexpenses.3. The asset lives used to depreciate equipment are less than reasonable, expected useful lives.4. Capitalizable assets are routinely expensed as repairs and maintenance, perishabletools, or supplies expense.5. Acquisitions of property are recorded at incorrect amounts.6. A loan against existing equipment is not recorded in the accounting records. Thecash receipts from the loan never reached the company because they were used forthe down payment on a piece of equipment now being used as an operating asset. Theequipment…
- Provisions shall be recognized for all of the following, except a. Restructuring costs after a binding sale agreement had been signed b. Future refurbishment costs due to introduction of a new computer system c. Rectificationcosts relating to defective products sold d. Cleaning-up costs of contaminated land when an oil entity has a published policy that it will undertake to clean up all contamination that it causesThe accountant of Swift Inc. was preparing for the audit of its financial statements for the year ended December 31, 2022, and discovered that an automobile was being incorrectly depreciated. The automobile was purchased on January 1, 2021, for $50,000 and the estimated residual value after five years was expected to be $5,000. The company uses the straight-line basis for depreciating vehicles, but the residual value was not considered when determining the depreciation amount. The financial controller informed the accountant that the company was switching to the double- declining balance method of depreciation for the current and future years, as it was believed this method would more accurately portray the consumption of benefits received from the asset's use. Required: State whether it is a change in accounting estimate/policy or an accounting error. Prepare the journal entries required on December 31, 2022. Ignore income tax effects. Show all workingsNizwa Company bought an equipment for manufacturing tube lights and the company management requested you to analyze and submit the report regarding the four major factors that required to consider for calculating depreciation of an equipment?
- Mike Crane is an audit senior of a large public accounting firm who has just been assigned to the Frost Corporation's annual audit engagement. Frost has been a client of Crane's firm for many years. Frost is a fast-growing business in the commercial construction industry. In reviewing the fixed asset ledger, Crane discovered a series of unusual accounting changes, in which the useful lives of assets, depreciated using the straight-line method, were substantially lowered near the midpoint of the original estimate. For example, the useful life of one dump truck was changed from 10 to 6 years during its fifth year of service. Upon further investigation, Mike was told by Kevin James, Frost's accounting manager, “I don't really see your problem. After all, it's perfectly legal to change an accounting estimate. Besides, our CEO likes to see big earnings!” Instructions Answer the following questions. a. What are the ethical issues concerning Frost's practice of changing the useful lives of…Please solve all questions. You are the manager responsible for the audit of Kicap Manis Berhad, a listed company, for the year ended 31 December 2019. The main business activity of Kicap Manis Berhad is the manufacture of farm machinery. The audit work has been completed, and you are reviewing the working papers in order to draft a report to those charged with governance. During the audit of property, plant and equipment (PPE), the audit team found no material misstatement but the following issues have come to your attention. It was discovered that authorization had not been gained for the purchase of office equipment with a cost of RM315,000. The officer in charge of the purchase claimed that the management has conveyed their agreement with the purchase in the management team monthly meeting, but the audit team has not been furnished with such minutes of meeting even after numerous requests. The client is using an internally developed PPE system, PropertyCare, to maintain the…You were requested to personally deliver your auditor’s report to the board of directors of Sebal Manufacturing Corporation and answer questions posed about the financial statements. While reading the statements, one director asked what are the precise meanings of the terms cost, expense, and loss? These terms seem sometimes to identify similar items and other times dissimilar items.”book value of the component’s net assets. The component was operating at a loss from the beginning of the year. in addition, Lynn had one of its manufacturing plants destroyed by an earthquake during the year. Earthquakes are not uncommon in Lynn’s operating environment. 1. Explain how Lynn should report discoutinued operations of a component of its business on its income statement for this year. Do not discuss earnings per share requirements. 2. Explain how Lynn…
