Auditing - ACF3003 (5) Question 4 (25 marks) Parts Co Ltd, is a private company, which sells air conditioners for both domestic and industrial purposes. The company has been in business for nine years now and is considering different strategies on how to expand the business. As one of the strategies, Parts Co Ltd is considering the acquisition, Main Co Ltd, which specializes in the repairs and maintenance of air conditioners. According to Parts Co Ltd, this acquisition represents to good opportunity consolidate its existing and set the base for future growth. Main Co Ltd has recently purchased the licence to distribute a new and innovative air conditioner. The air conditioner has a life time of two years more compared to that distributed by Parts Co Ltd. Main Co Ltd paid one million rupees as licence fee and the company is the sole licenced distributor in the country. Your firm has appointed you as the audit manager to perform a due diligence review on the acquisition of Main Co Ltd on behalf of Parts Co Ltd. Required: (a) Describe the purpose and scope of a due diligence assignment compare to the audit of financial statements. [15 marks] (b) Describe the key additional information which should be made available to assist your valuation of the trading licence as intangible assets. [10 marks)