Canada Cola Inc. (CCI) is a public company engaged in the manufacture and distribution of soft drinks across Canada. Its primary product is Canada Cola (“Fresh as a Canadian stream”), which is a top seller in Canada and generates large export sales.
You met with Jane MacNamara, the partner in charge of the CCI audit engagement, to commence planning for the upcoming audit of CCI. During this meeting, MacNamara informed you that early this year CCI entered into an agreement with the government of Russia and has commenced the manufacture and sale of Canada Cola in Russia. MacNamara would like you to prepare a detailed report that discusses the accounting implications of this new division of CCI for this engagement.
Prepare the report.