QUESTION 4 When auditing a furniture retailer, an auditor performed a price test over a batch of office chairs. The working paper (incomplete) is shown below. The clearly trivial threshold is $1,000 and the performance materiality is $100,000. The client has recognised a $1000 impairment for the office chair (Model A). What is the auditor's conclusion and how could the matter be followed up? Furniture N Things Ltd Inventory Impairment 30/6/2021 Schedule C-20 Prepared by: Allen Student Date: 31/07/2021 Reviewed by: Audit Procedure: Obtained the unit cost and total stock value from the client inventory list as of 30/06/2021. Obtained the selling prices and corresponding dates after year-end for these items from the client sales listing for the year ended 30/06/2021 to 31/07/2021. Inventory Inventory Name Quantity Original Total Last Sales Last Impairment|Further Impairment comments (Date) Sales Recognised impairment Value (5) Value ($) Price ($) Needed? KY/N) Jitem # Unit Cost Stock 10005 Office Chair (Model A) 160 100 $6,000 30/12/2020 50 $1000 10011 Adjustable Office Table 10 1200 $2,000 01/06/2021250 (Model F) O A. The inventory account is overstated by $2000. B. The inventory account is overstated by $3000. OC. The auditor will include the overstatement in Summary of Misstatements. OD. The auditor will not request any inting adjustment as the misstatement is below performance materiality O E. A and D OF A and OG.B and OH.B, C and D QUESTION 5 When performing an audit for the financial year ended 30 June 2021, the auditor calculated the inventory turnover ratio for some inventory items as below. Which of the inventory items might need additional impairment? Inventory Item 30 June 2021 30 June 2020 30 June 2019 Rubber Ducks 10.20 0.29 10.26 Fancy Trucks 10.37 0.36 10.36 10.36 10.36 10.37 Glittery Paper Sticky Glue 0.30 0.25 10.24 O A. Sticky glue O B. Fancy trucks OC. Glittery paper OD. Rubber ducks O E. None of the inventory items