Reference no: EM132679370
Before the audit report was signed, the audit team encountered the following situation. Treat each situation independently and assume the remaining financial statements are fine.
1) A property owned by Cook's Furniture Ltd was sold to Lidia Preston, the wife of Howard Cook in June 2020 (refer to case description in part A). The property has a market value of four million and was sold at 3.2 million.
Management did not disclose this in the financial statement because they believed this was a private matter.
The disposal of this asset has been appropriately accounted for on the financial statements
(e.g. the asset was removed from PPE and the loss of disposal was correctly recognised as an expense).
2) The subsequent selling price of the ready-made furniture range suggests the inventory valuation as at 30 June 2020 should be written down by $48,000 but management only wrote $38,000 off as per the financial statements because they were confident that they can increase the selling price again in 2021 after people settling back to normality.
3) Carl Cook decided to retire in 2021 due to health reasons, Carl is willing to sell his shareholding to the remaining shareholders. However, the BoD decided to explore the potential of selling the business. By the time to sign the 2020 financial statements, the company has not commenced a negotiation with any potential buyer. The BoD said to the auditor that they may not sell the business if they cannot get a good deal. Carl's retirement decision is disclosed on the financial statements, but not the intention to sell the business.
For each of the above situation:
Problem a) Discuss the audit procedure that the auditor needs to perform in relation to each situation.
Problem b) Explain which audit opinion is appropriate for each situation.
|
Possible values of the combined company
: The Chocolate Ice Cream Company and the Vanilla Ice Cream Company have agreed to merge and form Fudge Swirl Consolidated. Both companies
|
|
Prepare an income statement for the current year ended June
: The beginning of the current year, and dividends of $30,000 were paid during the current year. Prepare an income statement for the current year ended June
|
|
What is the present value of an infinite annuity
: What is the present value of an infinite annuity of $3,000, which provides the first payment in exactly 7 years? Your opportunity cost of funds is 9%.
|
|
Control the probability of stock out
: If the grocer wants to control the probability of stock out of the item to no more than 6% in a week, how many units of the item should be kept in the storage?
|
|
Discuss the audit procedure that auditor needs to perform
: A property owned by Cook's Furniture Ltd was sold to Lidia Preston, Discuss the audit procedure that the auditor needs to perform in relation to each situation.
|
|
Find and list the health care funding methods used in canada
: List the health care funding methods used in Canada. State the health care funding method used in your jurisdiction and describe payroll implication, if any.
|
|
Create a report to the management of the organisation
: Create a report to the management of the organisation from which the process comes - Modelling should be done in BPMN and models created using Microsoft Visio.
|
|
How much did January transactions increase or decrease
: Billed insurance companies for sales commissions earned, $12,500. How much did January's transactions increase or decrease retained earnings
|
|
How many units of the item should be kept in the storage
: If the grocer wants to control the probability of stock out of the item to no more than 6% in a week, how many units of the item should be kept in the storage?
|