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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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, 2011 25 years RO 400,000 RO 32,000 RO 256,000 Truck RO 80,000 Oct. 1, 2016 8 years RO 5,000 RO 13,184 RO 35,449
Transcribed Image Text: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, 2011 25 years RO 400,000 RO 32,000 RO 256,000 Truck RO 80,000 Oct. 1, 2016 8 years RO 5,000 RO 13,184 RO 35,449
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