(5) Prepare the audit adjustment at December 31, 2021 to correct the amount of machinery, long-term liabilities, and other related accounts PHILIPPINE REFINING COMPANYYou were engagedto audit the financial statements of the Philippine Refining Company forthe year ended December 31,2021 with comparative figures forthe year ended December 31,2020. One of your concemregarding materialrisk is on their long-tem liabilities related tothe acquisition of machinery.Your examination oftheir booksrevealed that on December 31,2019, Philippine RefiningCompanypurchasedmachinery having a cash selling price of PS5,933.75. The company paidP10,000 down and agreed to finance the remainder by making four equalpayments eachDecember 31 at the implicit interest rate of 12%.The accountant prepared a table ofpayment below fortheir long-tem financing foryoutotest forthe accuracy oftheir presentation and payment.Total PaymentInterest Payment Principal Payment Canying Value75,933.7556,950.3137,966.8718,983.44Date12/31/19 10,000.0012/31/2018,983.4418,983.4418,983.4418,983.4428,095.499,112.056,834.044,556.022,272.6112/31/2125,817.4812/31/22 23,539.4612/31/23 | 21,256.05The machine is being depreciated for 10 yearlife using straight-line method with no salvagevalue.Yourecompute the depreciation based on theirrecord andit show an annual depreciation ofP7,59338.Interest expense was tracedin the voucherregister and check register with the amount thesame in the table given by the accountant.The book of Philippine Refining Company was still open for the year ended December 31,2021 report.As auditor of the company, prepare a workingpaperif you think the recognition andpresentation is not correct and answerthe following:

The table of Payment of long term financing prepared by the accountant is wrong as considering the…

Answered: You were engas the year ended I 2020.…

Business

Accounting

You were engas the year ended I 2020. One of y the acquisitione

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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5. Which of these is the set of working papers that affect the current year and future audits? Select one:a. Permanent fileb. Current filec. Update filed. Carryover file
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According to the PCAOB Auditing Standard 3 on audit documentation, the complete audit documentation must be assembled 45 days after the report release date. What does this standard say about whether documentation can be added or deleted after the documentation completion date or whether documentation can be added after the document completion date?