In early 20X3, Luxury Furniture acquired a small manufacturer of high-quality long-lasting eco-friendly furniture, EcoBest Pty Limited (EcoBest). Luxury Furnitures management had identified that EcoBests line of products would fit extremely well with the Luxury Furniture business, and organised funding for acquisition from Best Bank. EcoBest uses special High-Density Polyethylene (HDPE) to create its products. Only the owner of EcoBest knows the secret ingredients for producing the special HDPE. These secret ingredients are apparently documented and held by EcoBests solicitors. Luxury Furnitures management has been advised that the intellectual property related to the formulas has the potential to be both a material and valuable asset and has been recognised as an intangible asset arising from the acquisition in accordance with accounting standard AASB 3 Business Combinations.

Identify key account balances from the information provided that are subjected to an increase in audit risk. Briefly explain what factors increase the audit risk associated with the four (4) account balances identified. In your explanation, please mention the key assertion(s) at risk of material misstatement for each account balance identified.