The Case: Britneys Company audit of Property, Plant, and Equipment Britneys Company has prepared the fixed assets and depreciation as shown in Exhibit 1. The following

information is available:

The land was purchased eight years ago when Building 1 was erected. The location was then remote, but it is now bordered by a major freeway. The appraised value is $35 million.

Building 1 has an estimated useful life of 35 years and no residual value.

Building 2 was built by a local contractor this year. It also has an estimated useful life of 35 years

with no residual value. The company occupied it on May 1 this year.

Equipment A was purchased January 1 six years ago, when the estimated useful life was eight

years with no residual value. It was sold on May 1 for $500,000.

The computer system was placed in operation as soon as Equipment A was sold. It is estimated

to be in use for six years with no residual value at the end.

The company estimated the useful life of the press at 20 years with no residual value.

Truck 1 was sold during the year for $1,000.

Truck 2 was purchased on July 1. The company expects to use it for five years and then sell it for

$2,000.

All amortization is calculated by the straight-line method using months of service.

a) Audit the depreciation calculations. Are there any errors? Put the errors in the form of an adjusting journal entry, assuming 90% of the depreciation on the buildings on the buildings and the press has been charged to cost of goods sold and 10% is still capitalized in inventory, and the other depreciation expense is classified as general and administrative expense. You must create a working paper similar to the one in exhibit 12-10 and properly document your work.

b) For one addition and one disposition create a fictitious supporting document. One of them must have the correct amount and the other one must include a discrepancy. Then perform an audit procedure.

This is all the information given, please just help out with what you can.

Exhibit 1 - PPE Continuity Schedule