Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 19, Problem 5RQ
To determine
Discuss why it is difficult to identify and audit assets impairments and how valuation specialist can be used to determine fair value of property and equipment
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Which of the following risks is an inherent risk related to asset
impairment?
a. Determining asset impairment is based on management judgment.
b. It is difficult to identify the costs associated with the discovery of
natural resources.
c. Management might have incentives to not record all asset disposals.
d. All of the above are inherent risks related to asset impairment.
4.
How will the approach for verifying repair expense differfrom that used to audit depreciation expense? Why will the approach be different?
In order to determine usefulness of intangibles, investigation and the examination of income data related to the asset will be of assistance.
True or False?
Chapter 19 Solutions
Auditing And Assurance Services
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 - Prob. 10RQ
Ch. 19 - Which documents will be used to verify accrued...Ch. 19 - Prob. 12RQCh. 19 - Prob. 13RQCh. 19 - Prob. 14RQCh. 19 - Prob. 15.1MCQCh. 19 - Prob. 15.2MCQCh. 19 - Prob. 15.3MCQCh. 19 - Prob. 16.1MCQCh. 19 - Prob. 16.2MCQCh. 19 - Prob. 16.3MCQCh. 19 - Prob. 17.1MCQCh. 19 - Prob. 17.2MCQCh. 19 - Prob. 17.3MCQCh. 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. 24DQPCh. 19 - Prob. 25DQPCh. 19 - You are auditing the financial statements of...Ch. 19 - Prob. 27DQPCh. 19 - Prob. 28DQPCh. 19 - Prob. 29DQP
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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
- Depreciation continues to be one of the most controversial, difficult, and important problem areas in accounting. Required: 1. Explain the conventional accounting concept of depreciation accounting, and discuss its conceptual merit with respect to (a) the value of the asset, (b) the amount(s) expensed, and (c) the discretion of management in selecting the method. 2. Answer the following: a. Explain the factors that should be considered when applying the conventional concept of depreciation to the determination of how the value of a newly acquired computer system should be assigned to expense for financial reporting purposes. (Ignore income tax considerations for this case.) b. What depreciation methods might be used for the computer system?arrow_forwardShould the engineers be able to assess the reality of depreciating fixed assets?arrow_forwardWhich of the following best describes why auditors audit leased assets in conjunction with the audit of property, plant & equipment? Multiple Choice (B & D are incorrect) A. Most leased assets should be capitalized. B. Repairs and maintenance expense is affected by leased assets. C. Management may choose to lease assets rather than buy them. D. Leased assets have a higher risk of misstatement.arrow_forward
- Discuss the overarching idea of Asset Liability Management and its key objectives. How does the process of Gap Analysis support Asset Liability Management?arrow_forwardDiscuss the risks associated with short selling an asset. Use examples and empirical evidence in your answer.arrow_forwardAre litigation costs to defend an intangible asset capitalized or expensed? Explain your answer.arrow_forward
- What factors or variables are considered when estimating the depletion base for an asset? Can you provide an example of how these factors are taken into account in practice?arrow_forwardWhy should the person who keeps the records of an asset not be the person responsible for its custody?arrow_forwardB. There are much argument about using cost instead of fair value to record acquired assets. In your opinion why do you think it is advisable to use cost instead of fair value as a basis for recording assets when acquired?arrow_forward
- What are some of the reasons for the impairment of intangible assets such as Goodwill? What are some justifications for treating the write-down as a permanent decline in value of the asset(s)? What are some justifications for considering that there has been a permanent increase in the value of the asset(s)? A difference between the book value and the fair value often exists. What role do technology advances and obsolescence have in deciding that assets have been impaired? Should both decrease and increases in the asset(s) value be reported in the financial statements? Why or why not?arrow_forwardA company could change their intention of use for an intangible asset resulting in the asset no longer being considered defensive? If this occurs, what is the impact on the accounting for the intangible asset?arrow_forwardExplain the process of ‘impairment of an asset’ and its definition? Explain how to account for an impairment of an item of property, plant and equipment bearrow_forward
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