Cloud 9 – Continuing Case

 

Cloud 9 – Continuing Case

Answer the following questions based on the information for Cloud 9 presented in the appendix to this text, as well as the current and earlier chapters. You should also consider your answers to the case study questions in earlier chapters.

You have obtained the following information about property, plant, and equipment for Cloud 9.

Property, Plant, and Equipment
Balance
January 31, 2022
Acquisitions Disposals Balance
January 31, 2023
Property, plant, and equipment $100,065,433 $9,451,131 $1,813,390  $107,703,174
Assets audited by W&S Partners $ 78,951,627 $7,468,810 $1,405,165   $85,015,272
Assets audited by other auditors   21,113,806  1,982,321   408,225   22,687,902
$100,065,433 $9,451,131 $1,813,390  $107,703,174

 

Accumulated Depreciation
Beginning
January 31, 2022
Depreciation
Expense
Disposals Ending
January 31, 2023
Accumulated depreciation $37,803,894 $5,576,162 $1,153,117 $42,226,939
Assets audited by W&S Partners $29,180,183 $4,383,307 $895,992 $32,667,498
Assets audited by other auditors   8,623,711  1,192,855   257,125   9,559,441
$37,803,894 $5,576,162 $1,153,117    $42,226,939

Required

  1. You are auditing the acquisition of property, plant, and equipment. Explain the audit procedures to audit the following assertions.
  2. Occurrence of acquisitions of property, plant, and equipment.
  3. Accuracy of acquisitions of property, plant, and equipment.
  4. Completeness of acquisitions of property, plant, and equipment.
  5. You are auditing the disposals of property, plant, and equipment. Explain the audit procedures to audit the following assertions.
  6. Occurrence of disposals of property, plant, and equipment.
  7. Accuracy of disposals of property, plant, and equipment.
  8. Completeness of disposals of property, plant, and equipment.
  9. How does auditing the disposals of property, plant, and equipment provide evidence related to depreciation expense?
  10. You select the following sample of acquisitions of property, plant, and equipment. What can you conclude about the acquisitions of property, plant, and equipment from this evidence? Tolerable misstatement for property, plant, and equipment is $1 million.

 

Stratum Book Value
of Population
Size of
Stratum
Size of
Sample
Book Value
of Sample
Audited Value
of Sample
1 > $750,000 $2,678,016  4  4 $2,678,016 $3,143,213
2 $250,000 − $750,000  2,343,151  6  3  1,231,576  1,231,576
3 < $250,000  2,447,643 27 10    932,534    932,534
$7,468,810 $4,842,126 $5,307,323

 

Assignment 5: Audit Procedures for Property, Plant, and Equipment

In this assignment, you will prepare a two to three (2-3) page professional document that fully addresses the requirements specified in the case. Include at least two (2) current references to scholarly and/or authoritative sources.

Specifically you will need to:

  1. Explain the audit procedures for acquisition and disposal of property, plant, and equipment related to the occurrence, accuracy, and completion assertions.
  2. Using examples, explain and demonstrate how auditing the disposal of property, plant, and equipment provides evidence of depreciation expense.
  3. Form conclusions about a selected sample of acquisitions of property, plant, and equipment.
  4. Use at least two (2) current, quality academic or authoritative sources in this assignment.

 

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