An auditor is auditing fixed assets and depreciation expenses of GMD Transportation Company for the fiscal...

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An auditor is auditing fixed assets and depreciation expenses of GMD Transportation Company for the fiscal year ending 31 December 2016. During the audit, the auditor detected the two trucks that are fully depreciated in 2016, but still depreciated until the end of 2016. Data of the trucks are as follows: Original cost Toyota 5 years 4 years Required: Knowing that GMD applies straight line method of depreciation and pay the corporate income tax of 40%. 1. Calculate depreciation overstated and identify items of GMD financial statements needs to be adjusted. 2. Indicate the two factors that interest the auditor most when auditing depreciation expenses. Hino $60,000 Useful life $36,000 Date put into use 01 June 2011 01 Dec 2012 An auditor is auditing fixed assets and depreciation expenses of GMD Transportation Company for the fiscal year ending 31 December 2016. During the audit, the auditor detected the two trucks that are fully depreciated in 2016, but still depreciated until the end of 2016. Data of the trucks are as follows: Original cost Toyota 5 years 4 years Required: Knowing that GMD applies straight line method of depreciation and pay the corporate income tax of 40%. 1. Calculate depreciation overstated and identify items of GMD financial statements needs to be adjusted. 2. Indicate the two factors that interest the auditor most when auditing depreciation expenses. Hino $60,000 Useful life $36,000 Date put into use 01 June 2011 01 Dec 2012

Answer rating: 100% (QA)

ANSWER 1 Calculation of depreciation overstated and identification of items of GMD financial stateme... View the full answer