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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
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 mpairmentFurther mpairment Comments tem o Date) Sales Recognised Impairment Value (5) Value (5) Price (5) Needed? KY/N) 10005 Office Chair (Model A) 60 100 $6,000 30/12/202050 $1000 110011 Adjustable Office Table 10 1200 $2,000 01/06/2021250 Model A The inventory account is overstated by $2000, B. The inventory account is overstated by $3000. The auditor will include the overstatement in Summary of Misstatements, D. The auditor will not request any accounting adjustment as the misstatement is below performance materiality. Unit Cost Stock EA and D F. A and 6.8 and H.B.C and D
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