Ulett & Lewis Limited is a medium sized company in the distribution business. You have been the
Question:
Ulett & Lewis Limited is a medium sized company in the distribution business. You have been the audit senior for a number of years and found that, with the two principal owners being ex-auditors, the internal controls are deemed to be robust and the company has a history of limited audit adjustments. For the year ended 31 December 2017 the company made a modest profit before tax of $6,347,500 and revenue of $25,735,100. During the year the company made the following purchases of property, plant & equipment (PP&E).
Additions sort on asset number Asset Orig. number life Description 263 4 Freezer 265 4 Showcase 272 4 Security equipment 274 4 Shop fittings 277 4 Safe Security Roll-down 279 10 Shutters 283 4 Trailer 284 4 Delivery Van 291 10 Storage materials 293 4 Point-of-sale system 296 10 Magnifying glass 313 10 Marble floor tiles 319 10 Magnifying glass 326 4 Building 330 10 Counter 334 10 Polish equipment Display materials shops 335 4 (X-mas) 340 10 Workbench + accessories 344 10 Cutting machine gems 347 4 Mercedes SUV 349 10 Showcase 352 4 Shop fittings 354 10 Forklift TOTAL Date of Acquisition Cost Acc. No. Acc. Name 21-Feb-17 485,000 101.035 Warehouse equipment 23-Feb-17 449,000 101.04 Shop interior 7-Mar-17 256,000 101.04 Shop interior 13-Mar-17 25,130 101.04 Shop interior 23-Mar-17 40,800 101.04 Shop interior 24-Mar-17 169,260 101.01 Shop equipment 26-Mar-17 4,375,000 101.035 Motor vehicles 15-Apr-17 6,500,000 101.035 Motor vehicles 11-Apr-17 35,500 101.015 Warehouse equipment 12-Apr-17 261,000 101.04 Shop interior 30-Jul-17 296,950 101.015 Warehouse equipment 23-Jun-17 170,000 101.01 Shop equipment 14-Aug-17 371,950 101.015 Warehouse equipment 14-Sep-17 15,750,000 101.035 Building 7-Oct-17 27,750 101.01 Shop equipment 10-Oct-17 41,975 101.015 Warehouse equipment 15-Oct-17 21,400 101.055 Display materials 16-Nov-17 350,000 101.015 Warehouse equipment 12-Dec-17 216,500 101.015 Warehouse equipment 15-Dec-17 9,848,600 101.035 Motor vehicles 17-Dec-17 224,500 101.01 Shop equipment 27-Dec-17 46,974 101.04 Shop interior 31-Dec-17 843,000 101.015 Warehouse equipment 40,796,289
Required
a) Select a sample of PP&E additions to perform substantive test of details. Indicate the reason for your selections, showing all workings and stating all assumptions.
b) As the auditor, indicate the likely source documents you would require for each item selected in (a) above
Elementary Statistics Picturing the World
ISBN: 978-0321911216
6th edition
Authors: Ron Larson, Betsy Farber