The Rousch Racing Company is in the business of building NASCAR race cars. They also have an engineering department that builds components for other racing teams, as well as for specialty cars built for major manufacturers such as Ford Motor Company. Rousch has three lease-related accounts on their books as follows:

Required
1. Identify the nature of each of the above accounts, i.e., asset, liability, and expense.
2. What would cause the accounts to increase during the year?
3. What is the relationship between the first two accounts and the lease expense account?
4. Write an audit program to audit the three accounts for this year. In the process, identify procedures that might be common between the audits of theaccounts.

Transcribed Image Text:

Balance Last Year Leasehold Improvement Leased Equipment Lease Expense $4,583,000 1,287,000 624,000 $3,600,000 832,000 515,000