You have been assigned the Property, Plant and Equipment portio In completing the fieldwork there are some issues that have arisen that you are no n of the audit your firm is working on t sure the client has ctly i.e. in accordance with GAAP (but then again, they might be correct). Using the Accounting Standards Codification database please provide answers as to how you would of the items address each ssue 1-The company replaced some machines this year after 12 years of use. The cost of the ne machines have appropriately been classified as Equipment in the general ledger. In determining the depreciation for the current year the controller has used the 5-year tax life as provided by the Modified Accelerated Cost Recovery System. The controller suggests that if it is good enough for the IRS it should be good enough for you! Issue 2-There are certain machines in the factory that OSHA requires be overhauled every five years. The company did the overhaul in the previous year so no overhaul costs were incurred during the current year. However, the controller knows that the planned major maintenance activity is just a few years away. Consequently, the controller wants to accrue-in-advance a portion of the next overhaul cost during the current year. What say you? Issue 3-The company has some equipment that is no longer needed and is held for sale. The book value of the equipment was $75,000 at the beginning of the year when taken out of service. The current estimated fair value (less costs to sell) is $52,000. The controller states that since the equipment has not yet been sold, it should be shown in the balance sheet at book value. In other words, the controller proposes that depreciation expense be recorded on the equipment for the year (which would be $5,000) and that the equipment be reported in the balance sheet at the remaining book value of $70,000. The controller says this is obviously the way the equipment should be reported. This is Accounting 101-how else would it be done?? Issue 4-The company installed a beautiful ornamental fence during the year. Because this fence adds to the attractiveness of the property (as well as keeping out unwelcome intruders) the controller has placed the cost of the fence in the Investments account. When you asked the controller about this classification the response was that the fence will surely increase the value of the property. Because the value of the property will increase as a result of the fence it has to be considered as an investment You have been assigned the Property, Plant and Equipment portio In completing the fieldwork there are some issues that have arisen that you are no n of the audit your firm is working on t sure the client has ctly i.e. in accordance with GAAP (but then again, they might be correct). Using the Accounting Standards Codification database please provide answers as to how you would of the items address each ssue 1-The company replaced some machines this year after 12 years of use. The cost of the ne machines have appropriately been classified as Equipment in the general ledger. In determining the depreciation for the current year the controller has used the 5-year tax life as provided by the Modified Accelerated Cost Recovery System. The controller suggests that if it is good enough for the IRS it should be good enough for you! Issue 2-There are certain machines in the factory that OSHA requires be overhauled every five years. The company did the overhaul in the previous year so no overhaul costs were incurred during the current year. However, the controller knows that the planned major maintenance activity is just a few years away. Consequently, the controller wants to accrue-in-advance a portion of the next overhaul cost during the current year. What say you? Issue 3-The company has some equipment that is no longer needed and is held for sale. The book value of the equipment was $75,000 at the beginning of the year when taken out of service. The current estimated fair value (less costs to sell) is $52,000. The controller states that since the equipment has not yet been sold, it should be shown in the balance sheet at book value. In other words, the controller proposes that depreciation expense be recorded on the equipment for the year (which would be $5,000) and that the equipment be reported in the balance sheet at the remaining book value of $70,000. The controller says this is obviously the way the equipment should be reported. This is Accounting 101-how else would it be done?? Issue 4-The company installed a beautiful ornamental fence during the year. Because this fence adds to the attractiveness of the property (as well as keeping out unwelcome intruders) the controller has placed the cost of the fence in the Investments account. When you asked the controller about this classification the response was that the fence will surely increase the value of the property. Because the value of the property will increase as a result of the fence it has to be considered as an investment