The Crishner Company has the following processes related to fixed assets: When a department manager determines a
Question:
The Crishner Company has the following processes related to fixed assets: When a department manager determines a need for a new fixed asset, he prepares a purchase requisition, which is forwarded to the chief financial officer. If the requested fixed asset purchase will not exceed remaining funds in the capital budget, the CFO approves the purchase and forwards the requisition to the purchasing department.
The purchasing agent assigned to purchase the fixed assets begins phoning vendors until she finds a vendor selling the requested asset. The purchase order is prepared and mailed to the vendor. Vendors are instructed to deliver the fixed asset to the requesting department.
A copy of the invoice is forwarded to the fixed asset department to record the asset details. Personnel determine the estimated life and salvage value by looking up the last similar asset purchase and using the previous estimated life and salvage value.
Required:
Describe any improvements you would suggest to strengthen the fixed asset internal controls at Crishner.
Salvage ValueSalvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
Step by Step Answer:
Accounting Information Systems Controls and Processes
ISBN: 978-1119329565
3rd edition
Authors: Leslie Turner, Andrea Weickgenannt, Mary Kay Copeland