It was noted that virtually all items in a company's financial statement are subject to some fair
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a. One of Ford's assets is "Net Investment in Operating Leases." What is the nature of such an account, that is, what would the amount represent?
b. What type of information should Ford be collecting regularly to use in determining whether the asset is subject to impairment?
c. If Ford is not collecting the information on a regular basis, does Ford have a material weakness in internal control over financial reporting?
d. Noting that any estimate is subjective, does the standard application of materiality apply to the auditor's estimate of an impairment of this particular asset?
e. Do the same concepts of audit risk apply to the estimate of an impairment for this asset as applies to other assets; i.e., what confidence level should the auditor have that the estimate of the fair value of this asset is correct within a materiality limit for the account? Explain your rationale.
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Related Book For
Auditing A Business Risk Approach
ISBN: 978-0538476232
8th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
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