When performing an audit of the property, plant, and equipment accounts, an auditor should expect which...

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When performing an audit of the property, plant, and equipment accounts, an auditor should expect which of the following to be most likely to indicate a departure from generally accepted accounting principles? A) Assets have been acquired from affiliated corporations with the related transactions recorded and described in the financial statements. B) Interest has been capitalized for self-constructed assets. C) Repairs have been capitalized to repair equipment that had broken down. D) The cost of freight-in on an acquisition has been capitalized. For which of the following accounts is it most likely that most of the audit work can be 77) performed in advance of the balance sheet date? A) Property, plant, and equipment. C) Current marketable securities. B) Accounts receivable. D) Cash. 76) Which of the following is a customary audit procedure for the verification of the legal ownership of real property? A) Examination of correspondence with the corporate counsel concerning acquisition matters. B) Examination of ownership documents registered and on file at a public hall of records. C) Examination of deeds and title guaranty policies on hand. D) Examination of corporate minutes and resolutions concerning the approval to acquire property, plant, and equipment. In violation of company policy, Lowell Company erroneously capitalized the cost of painting its warehouse. The auditors examining Lowell's financial statements would most likely detect this when: A) Examining the construction work orders supporting items capitalized during the 78). year. B) Observing, during the physical inventory observation, that the warehouse had been painted. C) Examining maintenance expense accounts. D) Discussing capitalization policies with Lowell's controller. When performing an audit of the property, plant, and equipment accounts, an auditor should expect which of the following to be most likely to indicate a departure from generally accepted accounting principles? A) Assets have been acquired from affiliated corporations with the related transactions recorded and described in the financial statements. B) Interest has been capitalized for self-constructed assets. C) Repairs have been capitalized to repair equipment that had broken down. D) The cost of freight-in on an acquisition has been capitalized. For which of the following accounts is it most likely that most of the audit work can be 77) performed in advance of the balance sheet date? A) Property, plant, and equipment. C) Current marketable securities. B) Accounts receivable. D) Cash. 76) Which of the following is a customary audit procedure for the verification of the legal ownership of real property? A) Examination of correspondence with the corporate counsel concerning acquisition matters. B) Examination of ownership documents registered and on file at a public hall of records. C) Examination of deeds and title guaranty policies on hand. D) Examination of corporate minutes and resolutions concerning the approval to acquire property, plant, and equipment. In violation of company policy, Lowell Company erroneously capitalized the cost of painting its warehouse. The auditors examining Lowell's financial statements would most likely detect this when: A) Examining the construction work orders supporting items capitalized during the 78). year. B) Observing, during the physical inventory observation, that the warehouse had been painted. C) Examining maintenance expense accounts. D) Discussing capitalization policies with Lowell's controller.

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