Explain the matters you should consider and state

Assignment Help Accounting Basics

Reference no: EM132981619

Question: Some time after these events, you are involved in reviewing the work carried out by your team at LVA as part of the first audit of their financial statements.

You see a schedule produced by the audit junior but then queried by the audit senior that describes a building acquired by LVA for $1 million 12 months ago that, according to Larry Vaughn, was to be developed as flats to be either sold or rented, depending on market conditions The junior has written the details of a conversation held between himself and Larry, who states that due to accounting laws, some properties can be held at fair value in the financial statements and any increases can be credited directly to profits. Given that the building is in a location where prices have apparently risen by around 12% recently, Larry has decided to increase profits by $120,000 and the junior has used this as evidence for this income item.

Required: Explain the matters you should consider and state the evidence you should expect to find in respect of the increase in value of this building.

Reference no: EM132981619

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