Professional Documents
Culture Documents
Nca SD21
Nca SD21
SD21
- obtain a schedule of intangible assets, cast it and agree the closing balances to the general
ledger, trial balance & draft financial statements
- discuss with the management regarding the decision to capitalized the new development
production process of $0.8m and assess whether it is based on the development has met the
criteria to be capitalized under IAS 38
- for those capitalised as development, agree cost incurred to the invoices and confirm
technically feasibility by discussion with the development manager or review the feasibility
reports
- for those expensed as research, agree costs to the invoices and supporting document to
confirm correct inclusion in the statement of profit or loss
- recalculate the amortisation cost for development which has commence production on 1
May 20X5 to ensure the accuracy and confirm it is in accordance with the amortisation
policy
- review the disclosure in the draft financial statements to ensure it is in accordance with the
IAS 38 intangible assets
MJ20
18. (a) - additions & disposals
- obtain a schedule of additions to the vehicles, cast it and agree the it has been recorded in
the non-current assets register to confirm accuracy and completeness
- obtain a schedule of disposals of the vehicles, cast it and agree the it has been removed
from the non-current assets register to ensure existence
- recalculate the depreciation on pro rate basis to ensure accuracy and confirm the
depreciation chraged on the correct period
- select a sample of the additions vehicles in the non-current assets register and agree that
the vehicles inspected exists, in used and in good working condition
- recalculate the loss on disposal amounted $1.1m and agree that it has been correctly
recorded in the general ledger, trial balance and draft financial statements
- review the disclosure regarding the additions and disposal of the vehicles in the draft
financial statements to ensure it is in compliance with the IAS 16 Property, Plant and
Equipment
SD19
16. (e) - disposals
- obtain a schedule of disposal of plant and machinery, cast it and agree that it has been
removed from the non-current asset register
- recalculate the loss on disposal of $160,000 to ensure accuracy and confirm that is has been
correctly recorded in the general ledger, trial balance and draft financial statements
- review the disclosure in the draft financial statements regarding the disposal of plant and
machinery to ensure it is comply with the IAS 16 Property, Plant and Equipment
MJ19
18. (b) - R&D
Hyacinth Co develops and manufactures computer components and its year end was 31 December
20X8. The company has a large factory, and two warehouses, one of which is off-site. You are an
audit supervisor of Tulip & Co and the final audit is due to commence shortly. Draft financial
statements show total assets of $23·2m and profit before tax of $6·4m. The following three matters
have been brought to your attention:
- obtain a schedule of intangible assets, cast it and agree closing balances to the general
ledger, trial balance and draft financial statements
- discuss with the management regarding the three new products in development to assess
which development can be capitalised if it has met all the criteria under IAS 38 Intangible
Assets based on the stages of development
- recalculate the amortisation for the development that has commenced production to ensure
the accuracy of the amortisation and also it is comply with the correct amortisation policy
- review the disclosure in the financial statements regarding intangible assets to ensure it is in
accordance with the IAS 38 Intangible Assets
MJ18
18. (a) - R&D
You are an audit manager of Cranberry & Co and you are currently responsible for the audit of
Gooseberry Co, a company which develops and manufactures health and beauty products and
distributes these to wholesale customers. Its draft profit before tax is $6·4m and total assets are
$37·2m for the financial year ended 31 January 20X8. The final audit is due to commence shortly and
the following matters have been brought to your attention:
- obtain a schedule of intangible assets, cast it and agree the closing balances to the general
ledger, trial balance and draft financial statements
- recalculate the amortisation for the capitalised development that has commenced
production to ensure accuracy and confirm it is in line with the amortisation policy
- for development that has been capitalised, agree costs incurred to the invoices and confirm
technically feasibility by discussion with the management or review the feasibility report
- for thoses expensed as research, agree costs to the invoices and supporting document to
confirm correct inclusion in the statement of profit or loss
- review the disclosure in the financial statements regarding the intangible assets to ensure it
is in accordance with the IAS 38 Intangible Assets
- discuss with the management the rationale of the depreciation rate used to assess its
reasonableness
- perform proof in total calculation for depreciation and compare with the actual depreciation
charged in current year to ensure its accuracy
- recalculate the depreciation to ensure it is complied with the depreciation policy
- review disclosure of depreciation in the draft financial statements to ensure it is in
accordance to the IAS 16 Property, Plant & Equipment
- review the non-current asset register to ensure it has been applied with the correct new
depreciation rate
S16
17. (a) - PPE revaluation
Elounda Co manufactures chemical compounds using a continuous production process. Its year end
was 31 July 20X6 and the draft profit before tax is $13·6 million. You are the audit supervisor and the
year-end audit is due to commence shortly. The following matters have been brought to your
attention.
- obtain a schedule of all the revalued ppe, cast it and agree closing balances to the general
ledger, trial balance and draft financial statements to ensure accuracy and completeness
- agree the revalued amount of the non-current assets to the valuation statement provided by
the valuer and to the general ledger to ensure accuracy and completeness
- consider the valuer competence and capability by assessing through enquiry regarding their
professional reputation, experience, professional qualification and independence
- select a sample of non-current asset from the non-current asset register and agree the asset
inspected exists, in used and in good working condition
- review the disclosure of property, plant and equipment in the draft financial statements to
ensure it is in accordance with IAS 16 property, plant and equipment
MJ16
4. (i) - additions & disposals
Kyanite Pizzas Co (Kyanite) operates a large chain of fast food restaurants. You are an audit
supervisor of Jasper & Co and are currently preparing the audit programmes for the audit of
Kyanite’s financial statements for the year ended 31 March 2016. You are reviewing the notes of last
week’s meeting between the audit manager and finance director where two material issues were
discussed.
D15
6. (b) (ii) - R&D
Andromeda Industries Co (Andromeda) develops and manufactures a wide range of fast moving
consumer goods. The company’s year end is 31 December 2015 and the forecast profit before tax is
$8·3 million. You are the audit manager of Neptune & Co and the year-end audit is due to
commence in January. The following information has been gathered during the planning process:
- obtain a schedule of intangible assets, cast it and agree closing balances to the general
ledger, trial balance and draft financial statements to ensure accuracy and completeness
- for those capitalised as development, agree costs incurred to invoices and confirm
technically feasibility by discussion with the management or review feasibility report
- for those expense as research, agree costs incurred to invoices and supporting document
and to inclusion in the statement of profit or loss
- review disclosure of intangible assets in the draft financial statements to ensure it is comply
with IAS 38 Intangible Assets