The following risks were identified during audit planning. Lemann Sdn Bhd produces yoga pants and other sportwear. Due to changes in consumer tastes, the company experienced a significant build-up in inventory of two of its products that may require a write-down. The 3G network in Malaysia will be fully retired by the end of 2021. Tel Berhad is expected to write off its fully depreciated asset as at December 31, 2021 amounting to RM750,000. Sales and receivables for Mega Sdn Bhd have increased significantly in its fourth quarter over the previous year. The company has pressured its customers in the past to purchase more products than they need, resulting into significant returns. High turnover of Financial Controller happened during the year and the newly appointed Financial Controller was on medical leave throughout the audit period. Required: For each risk, you are required to evaluate whether they are significant risks or not. Justify why each risk is significant or not.

The following risks were identified during audit planning. Lemann Sdn Bhd produces yoga pants and other sportwear. Due to changes in consumer tastes, the company experienced a significant build-up in inventory of two of its products that may require a write-down. The 3G network in Malaysia will be fully retired by the end of 2021. Tel Berhad is expected to write off its fully depreciated asset as at December 31, 2021 amounting to RM750,000. Sales and receivables for Mega Sdn Bhd have increased significantly in its fourth quarter over the previous year. The company has pressured its customers in the past to purchase more products than they need, resulting into significant returns. High turnover of Financial Controller happened during the year and the newly appointed Financial Controller was on medical leave throughout the audit period. Required: For each risk, you are required to evaluate whether they are significant risks or not. Justify why each risk is significant or not.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 11P

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