Reference no: EM133104666

Question - Audit of Property, Plant, and Equipment

1. What activities can be attributed to the increase in PPE balance? Name at least two.

2. What activities can be attributed to the overall decrease in PPE balance? Name at least two.

3. Name at least three (3) asset-intensive industries.

4. Name at least three (3) asset-light industries.

5. Audit procedures that auditors normally perform in an audit of depreciation expenses include recalculation of depreciation expenses. Why should the auditor perform substantive analytical procedures in the fixed assets categorically or by fixed asset type? Limit your answer to three sentences.

6. What does the fixed asset turnover ratio tell us? Is it good to have low turnover ratio?

7. In what ways can we improve the fixed asset turnover of the company? Hint: Consider the figures used in the formula individually and their overall effect in the ratio.

8. Why should we not compare the turnover ratios of companies coming from different industries?

9. Why does the timing of audit procedures differ for balance sheet and income statement accounts?

10. PPE balance did not decrease as expected and the volume of additions made to the PPE is the same as last year. What contributed to the minimal reduction in PPE?