Your client has introduced a significant upgrade of its products and has asked you to perform...

 

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Your client has introduced a significant upgrade of its products and has asked you to perform an obsolescence review of a parts inventory. You select a monetary unit sample. The sample disclosed items for which write-downs to lower of cost or market is appropriate. The estimated (projected) write-down is $320,000. The 90% two-sided confidence interval on that estimate is: lower confidence limit [LCL], $100,000; upper confidence limit [UCL], $650,000. The maximum tolerable misstatement is $400,000 and the planned confidence level is 95% (2-sided). a. Present the results graphically, with numbers. b. Describe those results in words [i.e., verbally). c. Present another graph giving the permissible range for an adjusting journal entry [AJE], with numbers. d. Give an acceptable AJE (DR and CR] in good accounting form. Your client has introduced a significant upgrade of its products and has asked you to perform an obsolescence review of a parts inventory. You select a monetary unit sample. The sample disclosed items for which write-downs to lower of cost or market is appropriate. The estimated (projected) write-down is $320,000. The 90% two-sided confidence interval on that estimate is: lower confidence limit [LCL], $100,000; upper confidence limit [UCL], $650,000. The maximum tolerable misstatement is $400,000 and the planned confidence level is 95% (2-sided). a. Present the results graphically, with numbers. b. Describe those results in words [i.e., verbally). c. Present another graph giving the permissible range for an adjusting journal entry [AJE], with numbers. d. Give an acceptable AJE (DR and CR] in good accounting form.

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a Graphical presentation of the results LCL Estimate UCL b Descri... View the full answer