3) b) During the audit, the team has identified the following errors: profit before tax for PSG is estimated at$3,000,000 for the year ended June 30, 2020,An error of $3,000 was found in the audit of depreciation expense of the warehouse purchased in January2020. The management of PSG have indicated that they do not wish to amend the financial statements.i.An error of $350,000 in the valuation of work in progress was found as a number of the assumptionscontain out of date information. The management of PSG have indicated that they do not wish to amend theii.financial statements.Calculate Performance Materiality and utilize this to discuss the appropriate treatment of the above twoerrors.

SOLUTION- PERFORMANCE MATERIALITY = DEPRECIATION EXPENSE + VALUE OF WORK IN PROCESS.

3) b) During the audit, the team has identified the following errors: profit before tax for PSG is estimated at $3,000,000 for the year ended June 30, 2020, i. An error of $3,000 was found in the audit of depreciation expense of the warehouse purchased in January 2020. The management of PSG have indicated that they do not wish to amend the financial statements. ii. An error of $350,000 in the valuation of work in progress was found as a number of the assumptions contain out of date information. The management of PSG have indicated that they do not wish to amend the financial statements. Calculate Performance Materiality and utilize this to discuss the appropriate treatment of the above two errors.

3) b) During the audit, the team has identified the following errors: profit before tax for PSG is estimated at $3,000,000 for the year ended June 30, 2020, i. An error of $3,000 was found in the audit of depreciation expense of the warehouse purchased in January 2020. The management of PSG have indicated that they do not wish to amend the financial statements. ii. An error of $350,000 in the valuation of work in progress was found as a number of the assumptions contain out of date information. The management of PSG have indicated that they do not wish to amend the financial statements. Calculate Performance Materiality and utilize this to discuss the appropriate treatment of the above two errors.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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