Instructions: explain, for each of the matters identified in Henry's notes (exhibit 1), the appropriate financial reporting treatment in AGG's consolidated financial statement for the period ending 31 december 2020. Set out appropriate adjustments

  

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3. Antonio Games Group (AGG) is a listed company in the stock exchange. AGG is in the gaming business and it sells games via online platform. The most popular games are Fruit Cutting, Tom the Cat, and Learning Alphabets. The online games can be downloaded by customers via an App and payment can be made through the App. The App is compatible for Apple and Android phones, and it can also be downloaded into laptop via its respective game websites. Customers can also make their payment via the App or online transfer. AGG has two subsidiaries i.e. Tommy Games Pty Ltd (TG) and AlphaGoggle.com Pty Ltd (AG). TG is in the business of marketing the games in Asia and Europe. On the other hand, AG is in the business of developing new technologies to support the increasing needs of gaming industry including incorporating the virtual reality function into online games and the ability to choose multiple virtual personalities in games. AGG and its subsidiaries are located in the UK. The head office of the company is in London while it has offices in Cardiff, Warwick, and Nottingham. You are the senior in charge of this Group audit for the year ended 31 December 2020 and you are working in Alexander & Ryan LLP, a firm of ICAEW Chartered Accountants. Alexander & Ryan LLP is the auditor for AGG and AG while the other subsidiary (i.e. TG) is audited by Sandy & Partners LLP. TG was previously audited by Angelina & Co LLP until the auditor's resignation on 31 December 2019. Henry, the Chief Financial Officer, has made a few notes relating to the current year transactions and handed to Janesther, your audit engagement manager (Exhibit 1). During the final audit, you found a few key issues and have made notes to discuss with Janesther (Exhibit 2). You received an email from Henry in reply for your questions asked during the final audit relating the competency and qualifications of the newly appointed component auditor. You have included the same as discussion note for your meeting with Janesther (Exhibit 3). 3. Antonio Games Group (AGG) is a listed company in the stock exchange. AGG is in the gaming business and it sells games via online platform. The most popular games are Fruit Cutting, Tom the Cat, and Learning Alphabets. The online games can be downloaded by customers via an App and payment can be made through the App. The App is compatible for Apple and Android phones, and it can also be downloaded into laptop via its respective game websites. Customers can also make their payment via the App or online transfer. AGG has two subsidiaries i.e. Tommy Games Pty Ltd (TG) and AlphaGoggle.com Pty Ltd (AG). TG is in the business of marketing the games in Asia and Europe. On the other hand, AG is in the business of developing new technologies to support the increasing needs of gaming industry including incorporating the virtual reality function into online games and the ability to choose multiple virtual personalities in games. AGG and its subsidiaries are located in the UK. The head office of the company is in London while it has offices in Cardiff, Warwick, and Nottingham. You are the senior in charge of this Group audit for the year ended 31 December 2020 and you are working in Alexander & Ryan LLP, a firm of ICAEW Chartered Accountants. Alexander & Ryan LLP is the auditor for AGG and AG while the other subsidiary (i.e. TG) is audited by Sandy & Partners LLP. TG was previously audited by Angelina & Co LLP until the auditor's resignation on 31 December 2019. Henry, the Chief Financial Officer, has made a few notes relating to the current year transactions and handed to Janesther, your audit engagement manager (Exhibit 1). During the final audit, you found a few key issues and have made notes to discuss with Janesther (Exhibit 2). You received an email from Henry in reply for your questions asked during the final audit relating the competency and qualifications of the newly appointed component auditor. You have included the same as discussion note for your meeting with Janesther (Exhibit 3).

Answer rating: 100% (QA)

Based on the information provided in Exhibit 1 I will explain the appropriate financial reporting treatment and suggest adjustments for the matters id... View the full answer