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When auditing a furniture retailer, an auditor performed a price test over batch of office chairs. The working paper (incomplete) is shown below. The clearly trivial threshold is $1,000 and the performance materiality is $100,000. The client has recognised a $1000 impairment for the office chair (Model A). What is the auditor's conclusion and how could the matter be followed up? Schedule C-20 Prepared by: Allen Student Date: 31/07/2021 Reviewed by: Audit Procedure: Obtained the unit cost and total stock value from the client inventory list as of 30/06/2021. Obtained the selling prices and corresponding dates after year-end for these items from the client sales listing for the year ended 30/06/2021 to 31/07/2021. Inventory Name Quantity Inventory Item # Furniture N Things Ltd Inventory Impairment 30/6/2021 10005 10011 Original Total Unit Cost Stock Value ($) Office Chair (Model A) 60 Adjustable Office Table 10 (Model F) A. The inventory account is overstated by $2000. OB. The inventory account is overstated by $3000. OC. The auditor will include the overstatement in Summary of Misstatements. 100 200 Last Sales Last (Date) $6,000 $2,000 Sales Price ($) 30/12/2020 50 01/06/2021 250 Impairment Further Recognised Impairment Needed? KY/N) $1000 OD. The auditor will not request any accounting adjustment as the misstatement is below performance materiality. OE. A and D OF. A and C OG. B and C OH. B, C and D Impairment Comments Value ($) When auditing a furniture retailer, an auditor performed a price test over batch of office chairs. The working paper (incomplete) is shown below. The clearly trivial threshold is $1,000 and the performance materiality is $100,000. The client has recognised a $1000 impairment for the office chair (Model A). What is the auditor's conclusion and how could the matter be followed up? Schedule C-20 Prepared by: Allen Student Date: 31/07/2021 Reviewed by: Audit Procedure: Obtained the unit cost and total stock value from the client inventory list as of 30/06/2021. Obtained the selling prices and corresponding dates after year-end for these items from the client sales listing for the year ended 30/06/2021 to 31/07/2021. Inventory Name Quantity Inventory Item # Furniture N Things Ltd Inventory Impairment 30/6/2021 10005 10011 Original Total Unit Cost Stock Value ($) Office Chair (Model A) 60 Adjustable Office Table 10 (Model F) A. The inventory account is overstated by $2000. OB. The inventory account is overstated by $3000. OC. The auditor will include the overstatement in Summary of Misstatements. 100 200 Last Sales Last (Date) $6,000 $2,000 Sales Price ($) 30/12/2020 50 01/06/2021 250 Impairment Further Recognised Impairment Needed? KY/N) $1000 OD. The auditor will not request any accounting adjustment as the misstatement is below performance materiality. OE. A and D OF. A and C OG. B and C OH. B, C and D Impairment Comments Value ($)
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The client has recognized a 1000 impairment for the office chair Model A The clearly trivial threshold is 1000 and the performance materiality is 1000... View the full answer
Related Book For
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
Posted Date:
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