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financial statements for the year ended 30th June 2021. According to the terms of engagement, there were restrictions imposed on him for the verification of

financial statements for the year ended 30th June 2021. According to the terms of engagement, there were restrictions imposed on him for the verification of the inventory. The set of records maintained were also inadequate since there was no supporting documentation for the figures of the receivables as well as payables for the last six months. However, MARWA Associates still accepted the appointment since it was statutory. Required: i. With reasons propose the appropriate opinion that the auditors should issue on audit of MACHICHA Ltd financial statements. ii. Draft the management responsibility, auditor's responsibility, basis for opinion and the opinion paragraphs that could be included into the audit report prepared by the auditor add notes
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financial statements for the year ended 30th June 2021. According to the terms of engagement, there were restrictions imposed on him for the verification of the inventory. The set of records maintained were also inadequate since there was no supporting documentation for the figures of the receivables as well as payables for the last six months. However, MARWA Associates still accepted the appointment since it was statutory. Required: i. With reasons propose the appropriate opinion that the auditor should issue on audit of MACHICHA Ltd financial statements. ii. Draft the management responsibility, auditor's responsibility, bas is for opinion and the opinion paragraphs that could be included finto the audit report prepared by the auditor Gantemhar 2 2020 ara: The following information is relevant: (i) At the date of acquisition the fair values of Sanawari Ltd's assets were equal to their carrying amounts with the exception of Sanawari Ltd's land which had a fair value of TZS 500,000/= below its carrying amount; it was written down by this amount shortly after acquisition and has not changed in value since then. (ii) On October 1, 2021, Patitu Ltd sold an item of plant to Sanawari Ltd at its agreed fair value of TZS2,500,000/=. Its carrying amount prior to the sale was TZS 2,000,000/=. The estimated remaining life of the plant at the date of sale was five years (straight-line depreciation). (iii) During the year ended September 30, 2022 Sanawari Ltd sold goods to Patitu Ltd for TZS 2,700,000/=, Sanawari Ltd had marked up these goods by 50% on cost. Patitu Ltd had a third of the goods still in its inventory at September 30 , 2022. There were no intra-group payables/receivables at September 30, 2022. (iv) Impairment tests on September 30, 2022 concluded that the value of the investment in Kijenge Ltd was not impaired, but consolidated goodwill was impaired by TZS 900,000/=. (v) The available-for-sale investments are included in Patitu Ltd's statement of financial position (above) at their fair value on October 1, 2021, but they have a fair value of TZS9,000,000/= at September 30,2022. (vi) No dividends were paid during the year by any of the companies. Required: (a) Prepare the consolidated statement of financial position for Patitu Ltd as at September 30,2022 (b) A financial assistant has observed that the fair value exercise means that a subsidiary's net assets are included at acquisition at their fair (current) values in the consolidated statement of financial position. The assistant believes that it is inconsistent to aggregate the subsidiary's net assets with those of the parent because most of the parent's assets are carried at historical cost. Required: Comment on the assistant's observation and explain why the net assets of acquired subsidiaries are consolidaled at acquisition

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