The charter service offered by the company includes two pilots, two flight attendants and the use of a state of the art jet for a predetermined rate. The company started operations with four jet two years ago and were catering for a niche market. The growth in the first 12 months was above expectation and the company's fleet quickly expanded to 12 jets. The market has stabilized in the last year, however, as more charter operators have entered the market. As as result , the company only need to purchase two jets during the current year in order to meet increase demands. The airplane used in the charter business are expensive and require a significant investment of capital by the company to purchase them. Execu Jet typically acquires new aircraft by obtaining new bank loan facilities. In not less than seven sentences, answer the following questions below: 1. As an auditor, what do you think would be the most appropriate sample selection method in performing the additions of PPE? Explain why you select that method. 2. What would be the relevant assertions of the test of details (test of fixed asset additions)?
The charter service offered by the company includes two pilots, two flight attendants and the use of a state of the art jet for a predetermined rate. The company started operations with four jet two years ago and were catering for a niche market. The growth in the first 12 months was above expectation and the company's fleet quickly expanded to 12 jets. The market has stabilized in the last year, however, as more charter operators have entered the market. As as result , the company only need to purchase two jets during the current year in order to meet increase demands. The airplane used in the charter business are expensive and require a significant investment of capital by the company to purchase them. Execu Jet typically acquires new aircraft by obtaining new bank loan facilities. In not less than seven sentences, answer the following questions below: 1. As an auditor, what do you think would be the most appropriate sample selection method in performing the additions of PPE? Explain why you select that method. 2. What would be the relevant assertions of the test of details (test of fixed asset additions)?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 39P
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