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Question 4-Property, Plant & Equipment 6 BlackHawking Limited is a medium sized company in the distribution business. You have been the audit senior for
Question 4-Property, Plant & Equipment 6 BlackHawking Limited is a medium sized company in the distribution business. You have been the audit senior for a number of years and found that, with the two principal owners being ex-auditors, the internal controls are deemed to be robust and the company has a history of limited audit adjustments. For the year ended 31 December 2017 the company made a modest profit before tax of $6,347,500 and revenue of $25,735,100. During the year the company made the following purchases of property, plant & equipment (PP&E). Additions sort on asset number Asset number Orig. life Description Date of acquisition 21-Feb-17 Cost Acc. Name 263 4 Freezer 485,000 Warehouse equipment 265 Showcase 23-Feb-17 449,000 Shop interior 272 4 Security equipment 7-Mar-17 256,000 Shop interior 274 4 Shop fittings 13-Mar-17 25,130 Shop interior 277 4 Safe 23-Mar-17 40,800 Shop interior 279 10 Security Roll-down shutters 24-Mar-17 169,260 Shop equipment 283 4 Trailer 26-Mar-17 4,375,000 Motor vehicles 284 4 Delivery Van 15-Apr-17 6,500,000 Motor vehicles 291 10 Storage materials 11-Apr-17 35,500 Warehouse equipment 293 4 Point-of-sale system 12-Apr-17 261,000 Shop interior 296 10 Magnifying glass 30-Jul-17 296,950 313 10 Marble floor tiles 23-Jun-17 170,000 Shop equipment 319 10 Magnifying glass 14-Aug-17 371,950 Warehouse equipment Warehouse equipment 326 4 Building 14-Sep-17 15,750,000 Building 330 10 Counter 7-Oct-17 27,750 Shop equipment 334 10 Polish equipment 10-Oct-17 41,975 Warehouse equipment 335 4 Display materials shops (X-mas) 15-Oct-17 21,400 Display materials 340 10 Workbench + accessories 16-Nov-17 350,000 Warehouse equipment 344 10 Cutting machine gems 12-Dec-17 216,500 Warehouse equipment 347 4 Mercedes SUV 15-Dec-17 9,848,600 Motor vehicles 349 10 Showcase 17-Dec-17 224,500 Shop equipment 352 4 Shop fittings 354 10 Forklift 27-Dec-17 31-Dec-17 46,974 Shop interior 843,000 Warehouse equipment TOTAL 40,806,289 Required a) Select a sample of PP&E additions to perform substantive test of details. Indicate the reason for your selections, showing all workings and stating all assumptions. (16 marks) b) As the auditor, indicate the likely source documents you would require for each item selected in (a) above. (4 marks)
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