Introduction: You, the Practitioner, are going to compile prospective financial statements for Proli Footwear, the Responsible Party. Currently you are the Chief Financial Officer for Proli Footwear. Proli management is contemplating a backward integration (acquiring one of its suppliers.) In order to make this acquisition, Proli plans to issue 20,000 shares of new $1 par common stock and assumes that the market value on the issuance date will be $60 per share. [They assume the acquisition price will be $1,200,000.] You will do a "forecast" that includes the summaries of significant assumptions and accounting policies below. You already have Proli Footwear's audited December 31, 2014 financial statements.

This prospective financial statement is, to the best of the responsible party's knowledge and belief, its expected financial position, results of operations, and cash flows. A financial forecast is based on the responsible party's assumptions reflecting the conditions it expects to exist and the course of action it expects to take. A financial forecast may be expressed in specific monetary amounts as a single point estimate of forecasted results or as a range, where the responsible party selects key assumptions to form a range within which it reasonably expects, to the best of its knowledge and belief, the item or items subject to the assumptions to actually fall.

Required:

1. Familiarize yourself with the Standards for Attestation Engagements, AT sec. 301.
2. A compilation of prospective financial statements is a professional service that involves the following:

a. Assembling, to the extent necessary, the prospective financial statements based on the responsible party's assumptions

b. Performing the required compilation procedures, including reading the prospective financial statements with their summaries of significant assumptions and accounting policies, and considering whether they appear to be presented in conformity with AICPA presentation guidelines and not obviously inappropriate

c. Issue a forecast compilation report

3.Use the Audited Proli Footwear Trial Balance as of December 31, 2014 and apply the following assumptions for the fiscal year end 2015.

4.Prepare a forecast compilation report for Proli Footwear as of December 31, 2015.

Significant Assumptions:

a)Proli will issue 20,000 new shares of $1 par common stock with an anticipated $60 market value on the date of acquisition of March 1, 2015.

b)All Goodwill will be impaired during 2015 due to the government's denial of a shoe patent.

c)Proli forecasts that Rent Expense will increase by 8% next year. In addition, a new building will be purchased on July 1, 2015. The purchase price will be approximately $6,000,000. Depreciation on the new building will be over 30 years, straight line.

d)Proli forecasts that Gross Sales will increase by 20% due to the purchase of the supplier and other new customers.

e)Dividends will increase by 100% in 2015.