Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Question
Chapter 13, Problem 33OQ
To determine
Indicate whether the given situations require proposed adjusted entry or not.
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Students have asked these similar questions
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?
Under IFRS, when an entity chooses the revaluation model as its accounting policy for measuring property, plant, and equipment, which of the following statements is correct?a. When an asset is revalued, the entire class of property, plant, and equipment (such as Land) to which that asset belongs must be revalued.b. When an asset is revalued, it is reported on the balance sheet at its current replacement cost.c. Revaluations of property, plant, and equipment must be made at least every three years.d. The revalued assets must be reported in a special section of the balance sheet separate from those assets measured using the cost model.
Which of the following would have an effect on the presentation of past years' comparable financial statements?
Select one:
O a. A component operation of the company is discontinued
O b. Revising the estimated life of equipment
Oc Correcting an error due to improper revenue recognition
O d. Impairment of Goodwill
Oe. Using MACRS to compute the depreciation of an asset for tax purposes
Chapter 13 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 13 - Prob. 1RQCh. 13 - K-J Corporation has current assets of 5 million...Ch. 13 - Prob. 3RQCh. 13 - Prob. 4RQCh. 13 - Explain the use of a system of authorizations for...Ch. 13 - Moultrie Company discovered recently that a number...Ch. 13 - Does a failure to record the retirement of...Ch. 13 - Prob. 8RQCh. 13 - Prob. 9RQCh. 13 - Prob. 10RQ
Ch. 13 - Prob. 11RQCh. 13 - Prob. 12RQCh. 13 - Prob. 13RQCh. 13 - Prob. 14RQCh. 13 - Prob. 15RQCh. 13 - Gibson Manufacturing Company acquired new factory...Ch. 13 - Prob. 17RQCh. 13 - Do the auditors question the service lives adopted...Ch. 13 - Prob. 19RQCh. 13 - Explain how the existence of lease agreements may...Ch. 13 - Prob. 21RQCh. 13 - Prob. 22QRACh. 13 - Prob. 23QRACh. 13 - Gruen Corporation is a large diversified company...Ch. 13 - Prob. 25QRACh. 13 - Prob. 26QRACh. 13 - Prob. 27QRACh. 13 - Prob. 28QRACh. 13 - Prob. 29QRACh. 13 - Prob. 30QRACh. 13 - Prob. 31QRACh. 13 - To assure accountability for fixed-asset...Ch. 13 - Prob. 32BOQCh. 13 - Which of the following is an internal control...Ch. 13 - Which of the following accounts should be reviewed...Ch. 13 - Prob. 32EOQCh. 13 - Prob. 32FOQCh. 13 - Which of the following statements is not typical...Ch. 13 - Prob. 32HOQCh. 13 - Prob. 32IOQCh. 13 - An effective procedure for identifying unrecorded...Ch. 13 - Which of the following is not an overall test of...Ch. 13 - Prob. 32LOQCh. 13 - Prob. 33OQCh. 13 - Analysis of which account is least likely to...Ch. 13 - Prob. 34BOQCh. 13 - Prob. 34COQCh. 13 - Prob. 34DOQCh. 13 - A search for overstated property, plant, and...Ch. 13 - The following are typical questions that might...Ch. 13 - Prob. 36PCh. 13 - Prob. 37PCh. 13 - Chem-Lite, Inc., maintains its accounts on the...Ch. 13 - Prob. 39PCh. 13 - You are reviewing the property, plant, and...
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Similar questions
- In this session, we discuss property acquisitions and dispositions. In financial accounting, the acquisition of assets means that specific procedures will be followed, including computing the depreciable cost of the asset and estimating its useful life. These steps are required to compute the depreciation for the acquired asset. The accounting treatment options vary including the use of Straight Line, Units of Production, or an accelerated method such as Declining Balance or Sum of the Years’ digits. (Heintz & Parry, 2017) If the asset is later sold before being fully depreciated, there may be an accounting gain or loss on disposal, depending on the circumstances. If assets are disposed of under the tax code, such disposal might trigger depreciation recapture. The deductions allowed under section 1231 allow for tax savings while reducing the taxpayer basis in the asset. Such a reduction in basis might be connected to a realized gain on the disposal of such an asset and allow the…arrow_forwardWhich of the following accounting policies is an example of costs versus benefits constraint being exercised in the disclosure of financial information? Inventory is valued at lower of cost or market. Property, plant and equipment are appraised and revalued every three years. Biological assets are stated at fair value unless the fair value cannot be measured reliably. Research and development costs are expensed as incurred.arrow_forward1. When an item of asset is transferred to and from the classification investment property, carried using the cost model, the measurement basis at the date of transfer is the a. original cost. b. fair value. c. carrying amount. d. recoverable amount.2. What could be a valid reason for transfers from investment property to property, plant and equipment? a. When there is a change in use b. based on the accountant's discretion c. When the entity adopts the fair value model d. when there is change in asset's life3. An entity has an investment property that is held for rental income. The entity uses the fair value model for reporting the investment property. Which of the following statement is true? a. changes in fair value are reported in profit or loss in the current period b. changes in fair value are reported as an extraordinary gain c. changes in fair value are reported in other comprehensive income for the period d. changes in fair value are…arrow_forward
- The least effective means for the auditor to determine whether a recorded intangible asset possesses the characteristic of an asset is a. Vouch the purchase by reference to underlying documentation. b. Inquire as to the status of the patent application. c. Evaluate the future revenue-producing capacity of the intangible asset. d. Analyze the research and development expenditures to determine that only those expenditures possessing future economic benefits have been capitalized.arrow_forwardThe following represent controls over authorization of acquisition and disposal ofinvestments, except: choices: Investment purchases and disposals should be authorized in accordance with the companypolicyAn investment committee approves the acquisition of investmentsThe company maintains a list of people in the investment committee.The journal entries are reviewed and approved by the accounting supervisor.arrow_forwardWhich of the following is least likely capitalized as cost of land? Grading, filling, draining clearing and similar site development activities Survey Landscaping and similar improvements that have limited useful lives. Special assessment Subsequent to initial recognition, an entity shall use this model to account for its items of property, plant and equipment. cost model revaluation model fair value model Cost model or revaluation model as an accounting policy choice It is the systematic allocation of the depreciable amount of an asset over its estimated useful life. Depreciation Impairment Revaluation all of thesearrow_forward
- The accountant has asked your team to explain to the intern of the other team the treatment for interest capitalization when accounting for self-constructed assets. In preparing your presentation notes, be sure to address the following. Paragraph citations are to be provided with answers where applicable. What is the objective of capitalising interest? What is meant by a qualifying asset? Identify the assets which may qualify for interest capitalization. If interest capitalization is allowed, what disclosures are required? Compute the amount of interest to be capitalised. Provide detailed workings. Round to 2 decimal places. What was the capitalised cost of the new office building on the statement of financial position.arrow_forwardThe least effective means for the auditor to determine whether a recorded intangible asset possesses the characteristic of an asset is Vouch the purchase by reference to underlying documentation. Inquire as to the status of the patent application. Evaluate the future revenue-producing capacity of the intangible asset Analyze the research and development expenditures to determine that only those expenditures possessing future economic benefits have been capitalized.arrow_forward29. Which of the following best describes the independent auditors' approach to obtaining satisfaction concerning depreciation expense in the income statement? Group of answer choices Establish the basis for depreciable assets and verify the depreciation expense Reconcile the amount of depreciation expense to those amounts credited to accumulated depreciation accounts Determine the method for computing depreciation expense and ascertain that is in accordance with generally accepted accounting principles Verify the mathematical accuracy of the amounts charged to income as a result of depreciation expensearrow_forward
- Under IFRS, when a company chooses the revaluation model as its accounting policy for measuring property, plant, and equipment, which of the following statements is correct? a. When an asset is revalued, the entire class of property, plant, and equipment to which the asset belongs must be revalued. b. When an asset is revalued, individual assets within a class of property, plant, and equipment to which that asset belongs can be revalued. c. Revaluations of property, plant, and equipment must be made every three years. d. An increase in an asset’s book value as a result of the first revaluation must be recognized as a component of profit and loss.arrow_forwardWhich of the following best describes the independent auditor's approach to obtaining satisfaction concerning depreciation expense in the income statement? a.Review the mathematical accuracy of the amounts charged to income as a result of depreciation expens b.Determine the method of computing depreciation expense and ascertain that it is in accordance with generally accepted accounting principle c.Support the basis of depreciable assets and the depreciation expens d.Reconcile the amount of depreciation expense to those amounts credited to accumulated depreciation account e.Select a sample of equipment items in the manufacturing facility and vouch back to the recorded subsidiary ledge r.s.e.s.e.ry ledger.arrow_forwardDescribe the different methods available for recording depreciation on plant assets. Recommend the approach that you feel would be most advantageous for your selected company and explain why. Discuss the process for reporting contingent liabilities in the financial statements. Provide two examples of contingent liabilities that you might expect to see on your selected company’s balance sheetarrow_forward
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