Financial statement disclosures

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Reference no: EM131157391

Questions & Problem

Raja & Co. has been appointed to be the auditors of Transoceanic for the year ended 31 December 2006. During the year, Transoceanic obtained a long-term loan from a local bank pursuant to a financing agreement that provide that

1. The loan  was to be secured by a fixed charge over the land and buildings, and inventory of the company.

2. Monthly installment payments were to commence July 1, 2016.

3. The interest rate is one percent per annum above the Based Lending Rate. 

In addition, during the year the company borrowed various short-term loan from two of the company's major shareholders including substantial amounts just prior to year-end.

Required:

a.) For purpose s of the audit of the financial statements of Transoceanic, what procedures should the auditors employ in examining the described  loans?

b.) What financial statement disclosures should the auditors expect to find with respect to the above loan 

Reference no: EM131157391

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