Reference no: EM132037212

Problem - Your firm is the auditor of King & Queen Manufacturing (KQM) Limited. The company's non-current assets include:

• Equipment on finance lease;

• Desktop computers and associated servers, printers and related equipment;

• Vehicles for use by sales personnel, executives and directors.

You have audited KQM for a number of years and are familiar with the computer system used to maintain its database for recording these assets. You are satisfied with the internal controls surrounding the acquisition and disposal of the assets. The company uses straight line depreciation as follows:

• Equipment - 15% per year on cost less estimated residual value;

• Computers - 20% per year on cost;

• Vehicles - 25% per year to estimated residual value.

Required:

(a) Describe the audit procedures you would use to verify the ownership of the equipment, computers and cars.

(b) Explain how you would determine that the depreciation rate on the various assets is appropriate.