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.

Answer: As per GAAP, in case of fixed assets the asset is firstly recognized at the cost. In our…

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.

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.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter9: Auditing The Revenue Cycle.

Section: Chapter Questions

Problem 37RQSC

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