EP AUDITING+ASSURANCE...-MYACCT.LAB
16th Edition
ISBN: 9780134148656
Author: ARENS
Publisher: PEARSON CO
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 19, Problem 22DQP
a.
To determine
Identify the type of evidence examined to support the beginning balances in the accounts.
b.
To determine
Identify the type of evidence used to support the additions to each account and explain the manner in which these sources of evidence differ for additions to the building account and the equipment account.
c.
To determine
Identify the type of evidence required to examine to support equipment disposals.
d.
To determine
State the procedures performed related to the ending balances in the accounts.
e (1)
To determine
State the other accounts that might be impacted by the additions of buildings and equipment.
e (2)
To determine
State the other accounts that might be impacted by the disposals of equipment.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Subsequent Events and Subsequently Discovered Facts. Michael Ewing is auditing the financial statements of Dallas Company for the year ended December 31, 2017. In concluding the process of gathering sufficient appropriate evidence, Ewing has asked to meet with his supervisor on the audit (John Ross) to discuss responsibility for events occurring afterthe date of the financial statements.Required:a. What is a subsequent event? During what time period is Ewing responsible for subsequent events?b. List some procedures that Ewing may perform to assist him in identifying subsequent events.c. What are two types of subsequent events? How should information related to these types of subsequent events be reflected in Dallas’s financial statements?d. Assume that on January 8, 2018, Dallas Company agreed to acquire Houston Inc. in a significant transaction. The date of Ewing’s report was February 7, 2018, and Dallas issued its financial statements (and Ewing’s reports on its financial statements…
The auditor assigned to audit the property, plant and equipment requested a schedule of property additions for the year as well as a schedule of repairs and maintenance expense,
which of the following is incorrect?
O The audit proposition that a capitalizable cost might have been erroneously charged as outright repairs and maintenance expense is necessary to audit the completeness assertion of PPE additions.
O Tracing property additions to the physical asset is necessary to audit the existence assertion over PPE.
O Items in the schedule of repairs and maintenance shall be vouched to the supporting documents to ascertain whether these are indeed to be recognized as outright expense. This is necessary to audit the
occurrence assertion of the expense.
Items in the schedule of property additions shall be traced back to the supporting documents to verify their propriety. This is necessary to audit the completeness assertion over PPE additions.
2. XYZ is conducting an audit of the property, plant, and
equipment records of AQA Corporation. XYZ selected two
specific assets for closer inspection. XYZ has examined
documentation related to each asset's original purchase and
compared it to the recorded cost, physically inspected the
item to determine that it is still in the possession of the
company and conducted other similar assurance
procedures.
The final step in the audit of these accounts is to test the
calculations of depreciation expense and accumulated
depreciation. XYZ has asked you to perform this final procedure
for 2018. Below is a schedule of the two assets, with the
depreciation values determined by AQA. The building was
depreciated by the straight-line method, and the truck by the
double-declining balance method. Determine if the indicated
depreciation values are correct.
Item
Cost
Purchase Service
Salvage
Value
Depreciation
Expense for
Accumulated
Date
Life
Depreciation at
2018
12/31/18
Building RO 1,200,000 July 1,…
Chapter 19 Solutions
EP AUDITING+ASSURANCE...-MYACCT.LAB
Ch. 19 - Identify three asset accounts, three expense...Ch. 19 - Explain the relationship between substantive tests...Ch. 19 - Prob. 3RQCh. 19 - Prob. 4RQCh. 19 - Prob. 5RQCh. 19 - Prob. 6RQCh. 19 - Prob. 7RQCh. 19 - Prob. 8RQCh. 19 - Prob. 9RQCh. 19 - Which documents will be used to verify accrued...
Ch. 19 - Prob. 11RQCh. 19 - Prob. 12RQCh. 19 - Prob. 13RQCh. 19 - Prob. 14RQCh. 19 - Prob. 15.3MCQCh. 19 - Prob. 15.1MCQCh. 19 - Prob. 15.2MCQCh. 19 - Prob. 16.1MCQCh. 19 - Prob. 16.2MCQCh. 19 - Prob. 16.3MCQCh. 19 - Prob. 17.1MCQCh. 19 - Prob. 17.3MCQCh. 19 - Prob. 17.2MCQCh. 19 - Prob. 18.1MCQCh. 19 - Prob. 18.2MCQCh. 19 - Prob. 18.3MCQCh. 19 - Prob. 19DQPCh. 19 - Prob. 20DQPCh. 19 - Prob. 21DQPCh. 19 - Prob. 22DQPCh. 19 - Prob. 23DQPCh. 19 - Prob. 24DQPCh. 19 - You are auditing the financial statements of...Ch. 19 - Prob. 29DQPCh. 19 - Prob. 26DQPCh. 19 - Prob. 27DQPCh. 19 - Prob. 28DQP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- You use the supplier invoice to populate the "No. of months of depreciation in the current period" in the depreciation expense recalculation template for a selected item. Based on this input, the template automatically calculates certain values. Which step are you performing in the depreciation expense recalculation? Recalculate the depreciation expense. Vouch the data used in the calculation to relevant documentation. Review the audit file for disconfirming evidence. Compare the recalculated amounts to the amount recorded in the property, plant and equipment system.arrow_forwardFollowing are seven audit activities. 1 (Click the icon to view the audit activities.) Requirement For each activity listed above, indicate in which phase of the audit the procedure was likely performed. 1 (Click the icon to view the phases of the audit.) Audit activity Phase а. Examine invoices supporting recorded fixed asset additions. b. Review industry databases to assess the risk of material misstatement in the financial statements. С. Summarize misstatements identified during testing to assess whether the overall financial statements are fairly stated.arrow_forwardExplain why the emphasis in auditing property, plant, and equipment is on the current period acquisitions and disposals rather than on the balances in the account carried forward from the preceding year. Under what circumstances will the emphasis be on the balance carried forward?arrow_forward
- 17. Which of the following best describes the auditors' approach to the audit of the ending balance of property, plant, and equipment for a continuing nonpublic client? Group of answer choices Audit of selected purchases and retirements for the last few years Audit of changes in the accounts since inception of the company Direct audit of the ending balance Agreement of the beginning balance to prior year's working papers and audit of significant changes in the accountsarrow_forwarda1.Which of the following best describes the auditors’ approach to auditing property, plant and equipment on continuing audit? Multiple Choice A. Perform analytical procedures. B. Substantiating all property, plant & equipment at year end. C. Audit the additions and reductions in property, plant & equipment during the period. D. Take a complete inventory of property, plant & equipment. a2.Which of the following is true about the audit of property, plant & equipment? Multiple Choice A. For the first audit of company, the audit of these accounts may require substantial additional time. B. Because of the materiality of these accounts, they generally require a substantial amount of audit time. C.One of the most difficult assertions to audit for these accounts is existence. D. Confirmation is an important audit procedure for these accounts.arrow_forwardIn performing risk assessment procedures for property, plant and equipment, an auditor may inquire of the client personnel which of the following questions? a. Is depreciation calculation and recording automated? b. Is there periodic physical count and tagging of property, plant and equipment? Is the result of the count reconciled to ledgers and general ledgers? c. Both a and b. d. Neither a nor b.arrow_forward
- explain. If, after obtaining an initial understanding of a client's internal control, the auditor wishes to further reduce the assessed level of control risk relating to plant asset transactions, the auditor should next Make extensive substantive tests of plant asset balances. Establish the physical existence of current year additions. Complete the plant asset section of the internal accounting control questionnaire. Further test those internal control procedures relating to processing and recording plant asset transactions.arrow_forwardYou are engaged in the audit of the financial statements of Holman Corporation for the year ended December 31, 20X6. The accompanying analyses of the Property, Plant, and Equipment and related accumulated depreciation accounts have been prepared by the chief accountant of the client. You have traced the beginning balances to your prior year’s audit working papers. All plant assets are depreciated on the straight-line basis (no residual value taken into consideration) based on the following estimated service lives: building, 25 years; all other items, 10 years. The company’s policy is to take one half-year’s depreciation on all asset additions and disposals during the year. Your audit revealed the following information: The company completed the construction of a wing on the plant building on June 30. The service life of the building was not extended by this addition. The lowest construction bid received was $17,500, the amount recorded in the Buildings account. Company personnel…arrow_forwardIn performing risk assessment procedures for property, plant and equipment, an auditor may inquire of the client personnel which of the following questions? a. Is depreciation calculation and recording automated? b. Is there periodic physical count and tagging of property, plant and equipment? Is the result of the count reconciled to ledgers and general ledgers? C. Both a and b. d. Neither a nor b. O a Od Oc Obarrow_forward
- In performing risk assessment procedures for property, plant and equipment, an auditor may inquire of the client personnel which of the following questions? a. Is depreciation calculation and recording automated? b. Is there periodic physical count and tagging of property, plant and equipment? Is the result of the count reconciled to ledgers and general ledgers? C. Both a and b. d. Neither a nor b. Oc O aarrow_forwardMy question is on auditing where I want to know whether the audit evidence is sufficient and appropriate such as oral representation by management, year end suppliers statement and physical inspection of a non current assetsarrow_forwardIn performing risk assessment procedures for property, plant and equipment, an auditor may inquire of the client personnel which of the following questions? a. Is depreciation calculation and recording automated? b. Is there periodic physical count and tagging of property, plant and equipment? Is the result of the count reconciled to ledgers and general ledgers? c. Both a and b. d. Neither a nor b. Group of answer choices a c b darrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub