QUESTION 1 You are an audit manager of Cranberry & Co and you are currently responsible for the audit of Gooseberry Co, a company which develops and manufactures health and beauty products and distributes these to wholesale customers. Its draft profit before tax is GH64m and total assets are GH372m for the financial year ended 31 January 2018. The final audit is due to commence shortly and the following matters have been brought to your attention: Research and development Gooseberry Co spent GH19m in the current year developing nine new health and beauty products, all of which are at different stages of development. Once they meet the recognition criteria under IAS 38 Intangible Assets for development expenditure, Gooseberry Co includes the costs incurred within intangible assets. Once production commences, the intangible assets are amortised on a straight line basis over three years. Management believes that this amortisation policy is a reasonable approximation of the assets useful lives, as in this industry there is constant demand for innovative new products. Depreciation Gooseberry Co has a large portfolio of property, plant and equipment (PPE). In March 2017, the company carried out a full review of all its PPE and updated the useful lives, residual values, depreciation rates and methods for many categories of asset. The finance director felt the changes were necessary to better reflect the use of the assets. This resulted in the depreciation charge of some assets changing significantly for this year. Bonus The companys board is comprised of seven directors. They are each entitled to a bonus based on the draft year-end net assets, excluding intangible assets. Details of the bonus entitlement are included in the directors service contracts. The bonus, which related to the 2018 year end, was paid to each director in February 2018 and the costs were accrued and recognised within wages and salaries for the year ended 31 January 2018. Separate disclosure of the bonus, by director, is required by local legislation. Required: (a) Describe substantive procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to Gooseberry Cos research and development expenditure.

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the auditor's report, if any, should this issue remain Cther follow up questions b) Describe substantive procedures the auditor should perform to obtain erfficient and appropriate Grudit evidence in relation to the matters identified regarding depreciation of property, plant, and equipment. Describe substantive procedures the cuditor perform to obtain sufficient and appropriate qudit evidence in relation to the alirectors' bonuses. Buring the audit, the team discovers that the intangible asted balance includes and 440,000 related to one of the which does not meet the criteria for capitalization. As cine new health and beauty product development project this project is ongoing, the finance director has that no adjustment is made in the 2018 Financial sgated statements. She is confident that the project will meet the criteria for capitalization in 2019, Required: El Discuss the issue and describe the impact on anwesewe