Fender Ltd has placed deposits with an overseas supplier totalling $350 000 for the manufacture of specially

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Fender Ltd has placed deposits with an overseas supplier totalling $350 000 for the manufacture of specially branded goods on 18 May 2020. On 5 June 2020 the supplier closed due to civil unrest in the country. Expert opinion obtained on 31 July 2020 stated that it was unlikely that the deposit would be recovered. Fender Ltd purchases over $3 million worth of branded products from this supplier every year. The year-end for the Fender Ltd audit is 30 June 2020, and the audit report is due to be signed on 14 August 2020.


Required

(a) Is the event material?

(b) What is the appropriate treatment of this item in the financial report?

(c) What audit report would be appropriate if the directors of Fender Ltd refuse to change the financial report?

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Related Book For  answer-question

Auditing A Practical Approach

ISBN: 9780730382645

4th Edition

Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton

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