Your audit junior has performed some of the work property, plant and equipment of Sterton Ltd...

 

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Your audit junior has performed some of the work property, plant and equipment of Sterton Ltd for you. She has unfortunately returned to finish her professional exams and have left you the asset register and the notes she made when physically verifying assets. The year end is 31 December 20X2. Materiality has been set at 20,000. The company's policy is to charge a full year's depreciation in the year of purchase (and none in the year of sale) and assumes a zero residual value. Requirement Review the asset register and identify where there are potential audit misstatements. Asset Register Accumulated Carrying Cost deprecation amount Machine 1 55,000 0 55,000 Vehicle 1 110,000 27,500 82,500 Vehicle 2 60,000 3,000 55,000 Machine 2 100,000 40,000 60,000 Vehicle 5 40,000 8,000 32,000 Vehicle 4 80,000 12,000 68,000 Machine 3 200,000 40,000 160,000 Computer 1 60,000 60,000 0 Total 705,000 190,500 518,500 Work performed by audit junior Asset Purchase date Description Vehicle 1 23/8/20X2 The vehicle was purchased for 130,000. It has a useful life of 4 years Asset Purchase date Description Vehicle 2 23/11/20X1 The truck was purchased for 60,000. It has a useful life of 20 years. It has been serviced regularly. Asset Purchase date Description Asset Purchase date Description Asset Purchase date Description Machine 2 20/4/20X0 This machine was purchased for 100,000. Minimal repairs have been carried out on it. During the year a fire to the engine meant the net realisable value of the machine is now 5,000. Vehicle 3 21/12/20X2 This truck was purchased on a one-month rental on 21/12/202. Vehicle 4 13/7/20X0 The truck was purchased for 80,000. It has a useful life of 20 years. Asset Purchase date Description Asset Purchase date Description Machine 3 23/2/20X1 The machine was purchased for 200,000. It has a useful life of 10 years. It has been serviced regularly and is in good condition. Vehicle 5 15/8/20X2 The truck was purchased for 40,000. Its useful life is 5 years. Asset Purchase date Description Computer 1 4/4/20X0 The truck was purchased for 60,000. Useful life is 3 years I identified no other assets, but management told me that an older machine was disposed of during the year. Your audit junior has performed some of the work property, plant and equipment of Sterton Ltd for you. She has unfortunately returned to finish her professional exams and have left you the asset register and the notes she made when physically verifying assets. The year end is 31 December 20X2. Materiality has been set at 20,000. The company's policy is to charge a full year's depreciation in the year of purchase (and none in the year of sale) and assumes a zero residual value. Requirement Review the asset register and identify where there are potential audit misstatements. Asset Register Accumulated Carrying Cost deprecation amount Machine 1 55,000 0 55,000 Vehicle 1 110,000 27,500 82,500 Vehicle 2 60,000 3,000 55,000 Machine 2 100,000 40,000 60,000 Vehicle 5 40,000 8,000 32,000 Vehicle 4 80,000 12,000 68,000 Machine 3 200,000 40,000 160,000 Computer 1 60,000 60,000 0 Total 705,000 190,500 518,500 Work performed by audit junior Asset Purchase date Description Vehicle 1 23/8/20X2 The vehicle was purchased for 130,000. It has a useful life of 4 years Asset Purchase date Description Vehicle 2 23/11/20X1 The truck was purchased for 60,000. It has a useful life of 20 years. It has been serviced regularly. Asset Purchase date Description Asset Purchase date Description Asset Purchase date Description Machine 2 20/4/20X0 This machine was purchased for 100,000. Minimal repairs have been carried out on it. During the year a fire to the engine meant the net realisable value of the machine is now 5,000. Vehicle 3 21/12/20X2 This truck was purchased on a one-month rental on 21/12/202. Vehicle 4 13/7/20X0 The truck was purchased for 80,000. It has a useful life of 20 years. Asset Purchase date Description Asset Purchase date Description Machine 3 23/2/20X1 The machine was purchased for 200,000. It has a useful life of 10 years. It has been serviced regularly and is in good condition. Vehicle 5 15/8/20X2 The truck was purchased for 40,000. Its useful life is 5 years. Asset Purchase date Description Computer 1 4/4/20X0 The truck was purchased for 60,000. Useful life is 3 years I identified no other assets, but management told me that an older machine was disposed of during the year.