Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 11, Problem 11.17Q
Explain the steps required to correct an error in accounting for property, plant, and equipment and intangible assets that is discovered in a year subsequent to the year the error was made.
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Explain the steps required to correct an error in accounting for property, plant, and equipment and intangible assets that is discovered in a year subsequent to the year the error was made.
Required (kindly explain answers):
1. Why is it necessary to examine the lapsing schedule for additions and disposals of property, plant and equipment?
2. How do auditors test the reasonableness of the estimates used in relation to PPE (e.g. depreciation method, useful life, residual value?)
3. What are the procedures involved in determining the reasonableness of the depreciation expense during the year?
Identify situations that involve a significant impairment of the value of property,plant, and equipment and intangible assets and describe the required accountingprocedures.
Chapter 11 Solutions
Intermediate Accounting, 10 Ed
Ch. 11 - Prob. 11.1QCh. 11 - Depreciation is a process of cost allocation, not...Ch. 11 - Identify and define the three characteristics of...Ch. 11 - Discuss the factors that influence the estimation...Ch. 11 - What is meant by depreciable base? How is it...Ch. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - Why are time-based depreciation methods used more...Ch. 11 - Prob. 11.9QCh. 11 - Prob. 11.10Q
Ch. 11 - Briefly explain the differences and similarities...Ch. 11 - Prob. 11.12QCh. 11 - Prob. 11.13QCh. 11 - What are some of the simplifying conventions a...Ch. 11 - Explain the accounting treatment required when a...Ch. 11 - Explain the accounting treatment and disclosures...Ch. 11 - Explain the steps required to correct an error in...Ch. 11 - Prob. 11.18QCh. 11 - Prob. 11.19QCh. 11 - Prob. 11.20QCh. 11 - Prob. 11.21QCh. 11 - Briefly explain the differences between U.S. GAAP...Ch. 11 - Under U.S. GAAP, litigation costs to successfully...Ch. 11 - Cost allocation At the beginning of its fiscal...Ch. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.8BECh. 11 - Prob. 11.10BECh. 11 - Prob. 11.11BECh. 11 - Prob. 11.12BECh. 11 - Prob. 11.13BECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - Prob. 11.18BECh. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - Prob. 11.20BECh. 11 - Prob. 11.21BECh. 11 - IFRS; impairment; goodwill LO1110 IFRS Refer to...Ch. 11 - Subsequent expenditures LO119 Demmert...Ch. 11 - Prob. 11.1ECh. 11 - Prob. 11.2ECh. 11 - Prob. 11.3ECh. 11 - Prob. 11.4ECh. 11 - Depreciation methods; solving for unknowns LO112...Ch. 11 - Prob. 11.10ECh. 11 - Prob. 11.12ECh. 11 - Prob. 11.13ECh. 11 - Prob. 11.15ECh. 11 - Prob. 11.16ECh. 11 - Prob. 11.26ECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - Prob. 11.30ECh. 11 - Prob. 11.31ECh. 11 - Prob. 11.32ECh. 11 - Prob. 11.33ECh. 11 - FASB codification research LO118 The FASB...Ch. 11 - Prob. 11.35ECh. 11 - Subsequent expenditures LO119 Belltone Company...Ch. 11 - Concept s; terminology LO111 through LO116, LO118...Ch. 11 - Depreciation methods; change in methods LO112,...Ch. 11 - Prob. 11.6PCh. 11 - Prob. 11.7PCh. 11 - Prob. 11.10PCh. 11 - Prob. 11.12PCh. 11 - Prob. 11.14PCh. 11 - Analysis Case 111 Depreciation, depletion, and...Ch. 11 - Communication Case 112 Depreciation LO111 At a...Ch. 11 - Judgment Case 113 Straight-line method; composite...Ch. 11 - Prob. 11.4DMPCh. 11 - Prob. 11.8DMPCh. 11 - Research Case 119 FASB codification; locate and...Ch. 11 - Prob. 11.11DMPCh. 11 - Real World Case 1115 Depreciation and depletion...Ch. 11 - Prob. 11.16DMPCh. 11 - Target Case LO112, LO118, LO119 Target...
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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
- Describe common substantive procedures used to audit a client’s property, plant, and equipment. How is depreciation audited? How are intangible assets audited?arrow_forwardExplain the appropriate accounting treatment required when a change is made in the service life or residual value of property, plant, and equipment and intangible assets.arrow_forwardWhich of the following is not a typical internal control over long-lived assets? a. Periodically reassess the appropriateness of depletion categories. b. Identify obsolete or scrapped equipment and write it down to scrap value. c. Reconcile physical asset inventory with the property ledger. d. Periodically review management strategy and systematically assess the impairment of assets.arrow_forward
- Plant, property and equipment and limited life identifiable intangible assets are recorded at cost and depreciated or amortized over their estimated useful lives. Auditors must satisfy themselves that such assets are accurately recorded at their original costs plus: a. their carrying amount is not impaired b. The estimated useful lives being used for depreciation and amortization are reasonable based on current and expected usage of the asset. c. depreciation and amortization are being calculated properly d. all of the above e. only B and Carrow_forwardDescribe the derecognition of property, plant, and equipment and intangible assetsarrow_forwardPlant assets often require expenditures subsequent to acquisition. It is important that they be accounted for properly. Any errors will affect both the balance sheets and income statements for a number of years. Instructions For each of the following items, indicate whether the expenditure should be capitalized (C) or expensed (E) in the period incurred. a. __________ Improvement. b. __________ Replacement of a minor broken part on a machine. c. __________ Expenditure that increases the useful life of an existing asset. d. __________ Expenditure that increases the efficiency and effectiveness of a productive asset but does not increase its salvage value. e. __________ Expenditure that increases the efficiency and effectiveness of a productive asset and increases the asset’s salvage value. f. __________ Expenditure that increases the quality of the output of the productive asset. g. __________ Improvement to a machine that increased its fair market value and its…arrow_forward
- Estimate the average total estimated useful life of depreciable property, plant, and equipment. Does the estimate reconcile with stated accounting policy on useful lives for property, plant, and equipment?arrow_forwardPlant assets often require expenditures subsequent to acquisition. It is important that they be accounted for properly. Any errors will affect both the balance sheets and income statements for a number of years. For each of the following items, indicate whether the expenditure should be capitalized or expensed in the period incurred. a. b. C. d. e. f. g. h. Improvement. Items Replacement of a minor broken part on a machine. Expenditure that increases the useful life of an existing asset. Expenditure that increases the efficiency and effectiveness of a productive asset but does not increase its salvage value. Expenditure that increases the efficiency and effectiveness of a productive asset and increases the asset's salvage value. Expenditure that increases the quality of the output of the productive asset. Improvement to a machine that increased its fair market value and its production capacity by 30% without extending the machine's useful life. Ordinary repairs. > > >arrow_forward46 The auditor should test for unrecorded retirements of properties by _______________. This procedure is relevant for validating the __________ assertion over the properties. Group of answer choices Tracing physical assets observed while conducting an ocular inspection to the records; completeness. Vouching items in the property records to the acquisition source documents; existence. Recomputing the depreciation charges on the properties; valuation. Selecting items in the property records and then tracing them back to the physical assets while conducting an ocular inspection of the properties, existence.arrow_forward
- Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets? a. Salvage value b. Estimated useful life c. Cash needed to replace the plant asset d. Costarrow_forwardExplain and evaluate the eff ects on financial statements and ratios of impairment, revaluation, and derecognition of property, plant, and equipment and intangible assets.arrow_forwardThe write-off of the cost of an intangible asset is called a.deterioration. b.functional depreciation. c.physical depreciation. d.amortization. The write-off of the cost of plant and equipment is called a.amortization. b.depletion. c.depreciation. d.deterioration The depreciation method in which the depreciable cost of an asset is apportioned equally over its estimated life in terms of months or years is called the a.straight-line method. b.declining-balance method. c.sum-of-the-years'-digit method. d.units-of-production method.arrow_forward
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