Question
A copy of the auditors working paper for auditing additions and disposals relevant to the balance of property, plant, and equipment (PPE) for the client
A copy of the auditors working paper for auditing additions and disposals relevant to the balance of property, plant, and equipment (PPE) for the client New Millennium Ecoproducts is presented in Figure 11.4.
The auditor agreed the amount of the additions to the purchase invoices and agreed the amount of the sale to the sales invoice and the receipt of payment. The auditor also agreed the date on these documents to ensure the items were recorded in the correct period. Included on the working paper is the auditors comment that the loss on disposal of item tested is material and does not confirm relevance of depreciation rate used by company. Which of the following statements is accurate with respect to the audit of additions and disposals?
a. Auditor tested cut-off by gathering evidence that the additions and disposals recorded were actually acquired and disposed of during the period.
b. The asset under construction has not been properly accounted for as there has been no depreciation expense to date.
c. Auditor has tested the accuracy of the additions and disposals by agreeing the amount to the purchase and sales invoices.
d. The depreciation rate will need to be checked by the auditor for reasonableness and consistency.
e. The loss of $65 provides evidence that the company is using a reasonable depreciation rate.
f. Working paper notes suggest the auditor has tested for completeness to ensure all additions and disposals that occurred have been recorded.
CLIENT: Period-end: Currency/unit: WAS PARTNERS New Millennium Ecoproducts 31/12/20 $000 Debit/Step by Step Solution
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