Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 19, Problem 6RQ
To determine
Discuss the factors that should be considered in developing an expectation for
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In auditing depreciation expense, what major considerationsshould the auditor keep in mind? Explain how each can be verified
Which 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.
In performing substantive procedures for a review of Rental Revenue from Land, Buildings, and Equipment Owned by the Client but Leased to Others, what procedures should the Auditor consider.
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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- What is the primary purpose of analyzing interest expense? Giventhis purpose, what primary considerations should the auditor keep in mind when doingthe analysis?arrow_forwardDescribe common substantive procedures used to audit a client’s property, plant, and equipment. How is depreciation audited? How are intangible assets audited?arrow_forwardIn depreciating the cost of an asset, accountants are most concerned witha. Conservatism.b. Recognizing revenue in the appropriate period.c. Full disclosure.d. Recognizing expense in the appropriate period.arrow_forward
- How is the directional risk of inventories applied in determining the appropriate audit procedures to be performed?arrow_forwardOutline the main factors to be considered in selecting an appropriate depreciation method.arrow_forwardIdentify the accounting issues related to asset impairment.arrow_forward
- What is depreciation, how is it calculated and how does it relate to the matching principle of accounting? Are there any estimates in depreciation and what are they? Why is it better to use these estimates than to not depreciate at all? What would be the alternatives to depreciation and what kinds of problems do they present? Please think about where we report equipment and similar items on the financial statements.arrow_forwardIllustrate the rules and laws that govern asset depreciation and the methods that accountants use to allocate the depreciation expenses?arrow_forwardRecording depreciation each period is necessary in accordance with the Select one: a. going concern principle. b. expense recognition principle. c. historical cost principle. d. asset valuation principle.arrow_forward
- Outline the measures used to describe possible loss accurately?arrow_forwardHow is the directional risk of investments applied in determining the appropriate audit procedures to be performed?arrow_forwardWhich of the following procedures test the accuracy and valuation assertion for property, plant, and equipment? A. Scan repairs and maintenance expenses for items that should have been capitalized. B. Tour the hotel and note any equipment not in use. C. Recalculate the depreciation expense. D. Read lease agreements and ensure adequate disclosure. E. Recalculate any gain or loss on disposal. F. Review insurance documents for equipment purchases. G. Obtain a valuation report for land to be reported at fair value.arrow_forward
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