Question
PPE Transaction #1 Economic Event On 4/4/20, Baker Roofing repaired several holes in the roof of the warehouse caused by a hail storm on 3/21/20,
PPE Transaction #1
Economic Event
On 4/4/20, Baker Roofing repaired several holes in the roof of the warehouse caused by a hail storm on 3/21/20, on account. The warehouse has an 11-year remaining life. | Accounting Transaction
3/27/20 db: PPE-Warehouse $26,936 cr: Accounts Payable $26,936
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Audit Steps Performed in Oct. 2020
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Audit Staff Conclusion
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PPE Transaction #2
Economic Event
On 5/1/20, purchased a 17 story office building on 0.2 acres of land for the new divisional headquarters for $77m, cash. The new suburban Ohio headquarters is 22 miles from downtown. | Accounting Transaction 5/1/20 db: PPE-Land $75m db: PPE-Building $2m cr: Cash $77m
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Audit Steps Performed in Oct. 2020
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Audit Staff Conclusion
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PPE Transaction #3
Economic Event
On 6/21/20, sold a barge (a big ship) for $7k. The barge was purchased in 2005 for $335k, had a 15 year useful life and a 30% salvage value. The client uses straight-line depreciation. | Accounting Transaction 6/21/20 db: Cash $7k db: Acc. Deprec.-Barge $268k db: Loss on Sale $59k cr: PPE-Barge $335k
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Audit Steps Performed in Oct. 2020
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Audit Staff Conclusion
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A. Assume youre reviewing a staff accountants work on three PPE transactions. The client has an Oct. 30, 2020 fiscal year end. Briefly discuss any audit concerns and provide guidance to the staff accountant.
A.1. PPE Transaction #1
A.2. PPE Transaction #2
A.3. PPE Transaction #3
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