On October 14, Montevista Inc. made deposits with an overseas supplier totaling $500,000 for the production of
Question:
On October 14, Montevista Inc. made deposits with an overseas supplier totaling $500,000 for the production of specialty items. On October 27, the supplier closed due to political unrest in the country. Montevista hired an international trade consultant to gain more information about the situation. The consultant concluded on January 11 that it is unlikely that the deposit will be recovered. Montevista purchases over $3 million worth of items from this supplier every year. Year-end for the Montevista audit is December 31, and the audit report is due to be signed on February 26.
Required
a. Discuss what audit procedures would be used to gather evidence about this situation.
b. What is the appropriate treatment of this item in the December 31 financial statements?
Audit ReportThe audit report is issued by a certified public accountant who is appointed by the shareholders to provide assurance upon the truth and fairness of the financial statements prepared by the managers of the company. Audit report contains the...
Step by Step Answer:
a Audit procedures to gather evidence about this subsequent event include inquiry of management and ...View the full answer
Auditing A Practical Approach with Data Analytics
ISBN: 978-1119401742
1st edition
Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton
