For each scenario, discuss the most appropriate type of opinion the auditor should issue. Explain briefly the reason for the opinion. For the situation 5 only, draft the opinion paragraph and any corresponding basis of opinion paragraph (if any).
Q: Compute the cost of debt capital.
A: Solution Calculate the cost of Debt Capital
Q: Common categories of a classified balance sheet include Current Assets, Long-Term Investments, Plant…
A: Current assets are assets that can be immediately sold and used to satisfy an organization's…
Q: Constellation Brands, a U.S. company, purchases merchandise from a German supplier on a regular…
A: Contribution margin The amount of profit earned by a company after deducting cost of variables from…
Q: Selma operates a contractor's supply store. She maintains her books using the cash method. At the…
A: Accrual method A method of accounting that records the revenue or incomes when it is earned and…
Q: Question The following information is provided by Zander Corporation: WIP inventory, January 1 Units…
A: INTRODUCTION: Work in Progress (WIP) refers to unfinished things that are still in the manufacturing…
Q: Required: If required, round all per unit amounts to the nearest cent. A. Determine the activity…
A: Activity Based Costing (ABC) is a concept, where overheads are allocated to the product, based on…
Q: Dynamo Manufacturing paid cash to acquire the assets of an existing company. Among the assets…
A: ANSWER Patent value = $32,200 Goodwill = $43700 Useful life of patent = 4 years Amortization…
Q: Last month, Major League Baseball star Rafael Devers signed a 10-year contract extension with the…
A: ANSWER:- 1. There could be several reasons why Rafael Devers chose to defer a portion of his…
Q: Victoria Company sells bedsheets for P3,000 per set. There is a promotion wherein if a customer buys…
A: The deferred revenue is the revenue which is earned but not yet accrued. In this case, the deferred…
Q: Stephen has just purchased a home for $128000 A mortgage company has approved his loan application…
A: The question is based on the concept of Annuity in Financial Management. Annuity refers to the…
Q: Sparkle Corporation manufactures and sells two types of decorative lamps, Knox and Ayer. The…
A: Cost can be classified into two categories such as fixed cost and variable cost. The fixed cost…
Q: 3. Why is the accrual basis of accounting requied by geneally accepted acccounting principles…
A: According to the accrual accounting system, revenue is recognised when it is generated and…
Q: 9-45. Activity-Based versus Traditional Costing-Ethical Issues Cathedral City Services (CCS) is a…
A: Absorption method of costing - is a method of costing wherein the total costs of the product are…
Q: Kiona Company set up a petty cash fund for payments of small amounts. The following transactions…
A: Petty cash fund is that fund which is established for small petty expenses in the business. Imprest…
Q: 2) Using the same information above, "David and Dana file a joint return. David earned $35,000…
A: INTRODUCTION: Social Security benefits offer a portion of the income for qualifying retired adults…
Q: the following quest
A: The farm's return on equity can be calculated by dividing the net income by the net…
Q: Required information Skip to question [The following information applies to the questions…
A: The asset exchange can be defined as a noncash transaction, The asset exchange arises when a noncash…
Q: Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells…
A: The contribution margin ratio represents the comparison of the contribution margin per unit and the…
Q: Shadee Corporation expects to sell 540 sun shades in May and 410 in June. Each shade sells for $168.…
A: Budgeted income statement represents the budgeted revenue and expenses of a firm it represents…
Q: Mike Greenberg opened Culver Window Washing Inc. on July 1, 2025. During July, the following…
A: Journal Entry :— It is an act of recording transaction in books of account when transaction…
Q: Monica Ltd is preparing its overhead budgets for a forthcoming period. The company has three…
A: Reciprocal / Repeated Distribution Method A more sophisticated approach of allocating costs for…
Q: Marie Company sells gift certificates worth P2,500,000 to customers in exchange for future delivery…
A: Since you have asked multiple questions, we will solve first question for you. To get the solution…
Q: this is an IFRS income statement; please identify all the errors inside the statement and explain…
A: Cash flow statement refers to the statement which states the inflow as well as outflow of the cash…
Q: If the statement of changes in owner's equity shows an ending balance of 4,875,000 and the business…
A: Owner's Equity :— It is the value of assets after paying all the company's liabilities from total…
Q: A company incurs $1240000 of overhead each year in three departments, Processing, Packaging, and…
A: Activity Rate :— It is the rate used to allocate activity cost to cost object under activity based…
Q: Loveland Manufacturing Company was started on January 1, 2018. The company was affected by the…
A: The cost of goods manufactured schedule is used to estimate the price of manufacturing goods over a…
Q: Falk Inc. has a machine with a book value of $50,000 and a five-year remaining life. A new machine…
A: Continue or replace is one of the decision making analysis that is used by the cost and management…
Q: P12-2A The following account balances relate to the stockholders' equity accounts of Molder Corp. at…
A: The amount that a business or individual keeps after costs, reimbursements, and taxes is known as…
Q: On January 1, 2021, the Moody Company entered into a transaction for 100% of the outstanding common…
A: Consolidated statements are issued by those business enterprises which have one or more operating…
Q: Melissa recently paid $505 for round-trip airfare to San Francisco to attend a business conference…
A: Note: As per our guidelines, we will solve the first three subparts for you a. The primary reason…
Q: 4.0 Having attended a NBAA course on activity -based costing (ABC) you decided to experiment by…
A: ABC costing is commonly known as Activity-based costing. In this method of costing, different…
Q: ons. If Requirements Prepare the following financial statements (with proper headings) for 2021: 1.…
A: Financial statements The accounting reports that are prepared by every public company at the closing…
Q: Kilbourne County engaged in the following transactions in summary form during its fiscal year. All…
A: Appropriations…………………………………………………$850 Fund balance……………………………………………………$10 Estimated…
Q: You are importing 200 units of a product for your manufacturing plant. Where the per unit cost is…
A: Landed cost is the total cost of a product on its journey from factory floor to buyers door.…
Q: 1. FICA is the total for Social Security of 12.4% and Medicare of 2.95% which will be paid half by…
A: DISCLAIMER: “Since you have asked multiple questions, we will answer the first question. If you want…
Q: Martin Company has complied the following information about it capital structure estimated costs of…
A: WACC :— It is the sum of average capital of all source of capital. Weight using book value :— It…
Q: Use your knowledge of balance sheets and ratio analysis to complete the following abbreviated…
A: “Since you have posted multiple questions, we will provide the solution only to the first question…
Q: Steven McFarland's weekly gross earnings for the week ending March 9 were $1,180, and her federal…
A: Payroll taxes such as security tax, Medicare taxes are need to be deducted by employer from…
Q: Shadee Corporation expects to sell 540 sun shades in May and 410 in June. Each shade sells for $168.…
A: BUDGETED INCOME STATEMENT: Budgeted Income Statement is prepared with the help of other budget such…
Q: Lorna Company is a new company with a beginning retained earnings balance of zero. It has the…
A: Net income :— It is the difference between total revenue and total expenses. Net income is…
Q: a. Under accrual accounting, what amount of revenue should Boyd report for 2021? How does the…
A: Hi student Since there are multiple subparts, we will answer only first three subparts. Accrual…
Q: The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as…
A: Under accrual basis of accounting the revenue is recognized when earned irrespective of when cash is…
Q: Cherokee Incorporated is a merchandiser that provided the following inform Number of units sold…
A: The income statement is an essential part of the financial statements of the company. It indicates…
Q: Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed…
A: The question is based on the concept of Cost Accounting. Variable cost is the cost that remains the…
Q: 4. Calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders for…
A: Ratio Analysis: Enterprise use ratio analysis as a method to assess the financial health and status…
Q: Abe, who is single, retired from his job this year. He received a salary of $25,000 for the portion…
A: INTRODUCTION: A person's adjusted gross income, or AGI, is the total gross income less specified…
Q: Please calculate the Dividends per Share and Earnings per Share for each year for Brown Company. Use…
A: Earnings per share means amount of earnings or net income attributed to each common share in…
Q: also received payments from customers on account totaling $5,000. At the beginning of May, the…
A: Cash is the life blood of the company. Cash is the liquid asset of the company it helps in oblige…
Q: What are total liabilities at the end of the first year?
A: Solution Answer is $84000 Balance sheet…
Q: Fred and Wilma are a legally married couple. Fred is a building contractor who has $373,480 of…
A: The tax period is not given in the question and hence we assume the current year…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- the following independent situation, discuss the issue and describe the impact on the audit record with provide example Ii.Subsequent to the date of the financial statements, as a part of your subsequent event audit procedures, you observed that one of the purchaser’s two uninsured flora was broken because of a recent fireplace. The newspapers defined the occasion in element but the monetary statements and appended notes prepared by means of the purchaser did now not disclose the loss due to the fire.In reviewing of subsequent events, you learned of heavy damage to the client’s warehouse due to a fire occurred after year-end. The loss will partly be reimbursed by insurance. The newspaper described the event in detail. The client made adjustment to related inventories and buildings to reflect the loss. Assume im a auditor, and I am giving opinion. Since the client made adjustments to related inventories and buildings to reflect the loss after a heavy damage. However, it is a non-adjustable subsequent event, the company is not supposed to adjust the entries. Also, they haven’t claimed to make any footnotes to explain the crisis, which is inadequately disclosed, which both are accounting disagreements, since it is heavy damage, so both are supposed to be highly material, so adverse opinions should be issued. If the client did disclose the footnotes to explain the crisis, adverse opinions with explanatory opinion should be issued. Is adverse opinion with explanatory paragraph…For the following independent situations, assume that you are the audit partner on the engagement: 1. The client has changed from double declining balance to straight line depreciation for its equipment. The effect on this year’s income is material, and no information is disclosed in footnotes related to the change. You believed the change aligns with change in usage pattern of the equipment. Discuss the most appropriate type of opinion the auditor should issue. Explain briefly the reason for the opinion.
- For the following independent situations, assume that you are the audit partner on the engagement: 1. The client recorded impairment of goodwill for $40,000 last year. It recorded reversal of impairment in goodwill for $20,000 this year after considering the carrying amount and recoverable amount of the cash generating unit. Net income is $10,000 in current year. Discuss the most appropriate type of opinion the auditor should issue. Explain briefly the reason for the opinion.In reviewing of subsequent events, you learned of heavy damage to the client’s warehouse due to a fire occurred after year-end. The loss will partly be reimbursed by insurance. The newspaper described the event in detail. The client made adjustment to related inventories and buildings to reflect the loss. All facts are the same as situation 1, but the client did not make adjustment to year end figure of inventory. During the course of examination on your audit client, you suspect that a material amount of assets has been misappropriated through fraud. Management refuses to allow you to investigate further to confirm the suspicions. The client’s financing arrangements expired and the amount outstanding was past due. The client cannot renegotiate or obtain refinancing and is considering filing bankruptcy. Financial statements were prepared using the going concern basis and this fact is not disclosed. An equipment which was used by the client for more than 5 years is considered to…17. Which of the following best describes the auditors' approach to the audit of the ending balance of property, plant, and equipment for a continuing nonpublic client? Group of answer choices Audit of selected purchases and retirements for the last few years Audit of changes in the accounts since inception of the company Direct audit of the ending balance Agreement of the beginning balance to prior year's working papers and audit of significant changes in the accounts
- Subsequent to the date of the financial statements as part of his post balance sheet date auditprocedures a CPA learned that a recent fire caused heavy damage to one of a client's two plants ;the loss will not be reimursed by insurance. The newspapers described the event in detail.. thefinacial statements and footnotes as prepared by the client did not disclose the loss caused by thefire. Which of the following is a condition requiring a departure from a standard unmodified auditopinion A. Failure to follow GAAP B. Scope restriction C. Change in Accounting Principle D. None of the aboveWhat type of auditor report would be issued in each of the following cases? Justify your choice. Bowles Company is engaged in a hazardous trade and cannot obtain insurance coverage from any source. A material portion of the company’s assets could be destroyed by a serious accident. Drave Company owns substantial properties that have appreciated significantly in value since the date purchase. The properties were appraised and are reported in the balance sheet at the appraised values with full disclosure. The CIAs believe that the appraised values reported in the balance sheet reasonably estimate the assets current values. The CIA firm is auditing the financial statement that are to be included in the annual report to the stockholder of Eagle Company, A regulated company Eagle’s Financial Statement are prepared as prescribed by a regulatory agency of the Pakistan Government and some items are not presented in accordance with generally accepted accounting principles. The amounts…Consider the following independent situations relating to the audit of five different audit clients for year ended 30 June 20X8. Assume that all the situations are material. For each of the above cases, state the appropriate audit opinion that the auditor would require. Give reasons 1. new client has changed its valuation method of property, plant and equipment. It has adopted the Fair Value Revaluation Model to replace the Historic cost measurement method. Whilst the auditor does not object to the change in the valuation model, the new method has a material effect on the financial statements and has not been disclosed. A special meeting was held between the CFO and the Finance Team and the Lead Partner from the Audit team, but nothing was resolved 2. (ii) A new start-up company specialising in air-drone mail/package delivery has grown strongly in the past year. Over the past three years the company has made consistent losses, borrowed heavily, experienced staff turnover and dealt with…
- Consider the following independent situations relating to the audit of five different audit clients for year ended 30 June 20X8. Assume that all the situations are material. (i) A new client has changed its valuation method of property, plant and equipment. It has adopted the Fair Value Revaluation Model to replace the Historic cost measurement method. Whilst the auditor does not object to the change in the valuation model, the new method has a material effect on the financial statements and has not been disclosed. A special meeting was held between the CFO and the Finance Team and the Lead Partner from the Audit team, but nothing was resolved. (ii) A new start-up company specialising in air-drone mail/package delivery has grown strongly in the past year. Over the past three years the company has made consistent losses, borrowed heavily, experienced staff turnover and dealt with some significant regulatory and operational issues. Nonetheless, the current CEO believes the company is…You are involved with the audit of Jelco Company for year 1 and have been asked to consider the confirmation reply results indicated below. For each confirmation reply, select the proper action to be taken from the following possible actions: (Each of the "Action" items may be used once, more than once, or not at all.) (1)Exception; propose an adjustment. (2)Send a second confirmation request to the customer. (3) Examine shipping documents and/or subsequent cash receipts. (4)Verify whether the additional invoices noted on the confirmation reply pertain to the year under audit or the subsequent year. (5) Not an exception; no further audit work is necessary. Proper Action Customer Reply (and any audit action already taken) a. "We mailed the check for this on December 31." "We returned those goods on December 2." You have been able to determine that the goods were received by the client on December 29, but not recorded until January 2. c. "We also owe for two more invoices for purchases…For each of the following misstatements in property, plant, andequipment accounts, state an internal control that the client can implement to preventthe misstatement from occurring and a substantive audit procedure that the auditor canuse to discover the misstatement:1. Computer equipment that is abandoned or traded for replacement equipment isnot removed from the accounting records.2. Depreciation expense for manufacturing operations is charged to administrativeexpenses.3. The asset lives used to depreciate equipment are less than reasonable, expected useful lives.4. Capitalizable assets are routinely expensed as repairs and maintenance, perishabletools, or supplies expense.5. Acquisitions of property are recorded at incorrect amounts.6. A loan against existing equipment is not recorded in the accounting records. Thecash receipts from the loan never reached the company because they were used forthe down payment on a piece of equipment now being used as an operating asset. Theequipment…