EBK AUDITING & ASSURANCE SERVICES: A SY
10th Edition
ISBN: 9781259293245
Author: Jr
Publisher: MCGRAW HILL BOOK COMPANY
expand_more
expand_more
format_list_bulleted
Question
Chapter 16, Problem 16.30P
a.
To determine
Introduction: Fair value measurement is related to IFRS 13 which permits fair value measurement and the disclosure about the fair value measurement. IFRS 13 provides fair value related to exit price notion and uses a fair value hierarchy which gives market-based measurement.
The fair value inputs to the value of each account.
b.
To determine
Introduction: Fair value measurement is related to IFRS 13 which permits fair value measurement and the disclosure about the fair value measurement. IFRS 13 provides fair value related to exit price notion and uses a fair value hierarchy which gives market-based measurement.
The valuation levels for each of the identified inputs as well as the accounts as a whole.
c.
To determine
Introduction: Fair value measurement is related to IFRS 13 which permits fair value measurement and the disclosure about the fair value measurement. IFRS 13 provides fair value related to exit price notion and uses a fair value hierarchy which gives market-based measurement.
The audit plan, by account so that S can obtain assurance regarding the fair value of each input.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Dirks was an officer of a New York broker-dealer firm that specialized in providing investment analysis of insurance company securities to institutional investors. On March 6, Dirks received information from Ronald Secrist, a former officer of Equity Funding of America. Secrist alleged that the assets of Equity Funding, a diversified corporation primarily engaged in selling life insurance and mutual funds, were vastly overstated as the result of fraudulent corporate practices. Dirks decided to investigate the allegations. He visited Equity Funding’s headquarters in Los Angeles and interviewed several officers and employees of the corporation. The senior management denied any wrongdoing, but certain corporation employees corroborated the charges of fraud. Neither Dirks nor his firm owned or traded any Equity Funding stock, but throughout his investigation he openly discussed the information he had obtained with a number of clients and investors. Some of these persons sold their holdings…
Phillips CPA Firm is auditing the accounts of Tojo Enterprises, Inc., a national distributor
of kitchen appliances. After reviewing the minutes of board of directors meetings as well
as recent SEC filings, Phillips CPA firm have noted that key executives are extremely
close to achieving a substantial bonus if the firm's stock price achieves a certain level in
the market. Based on this finding, what might Phillips CPA Firm decide to do?
O Phillips CPA Firm are likely to audit competing companies within the same
industry as a basis for comparison.
O Phillips CPA Firm are likely to assess control risk as low on the premise that
management's desire to achieve stock price forecasts will increase fraud risk.
O Phillips CPA Firm are likely to assume fraud risk is high, due to senior
management's proximity to achieving certain desired stock prices.
O None of these answer choices are correct.
In order to expand its operations, Barton Corp. raised $5million in a public offering of common stock, and also negotiated a $2 million loanfrom First National Bank. In connection with this financing, Barton engaged Hanover &Co., CPAs, to audit Barton’s financial statements. Hanover knew that the sole purpose ofthe audit was so that Barton would have audited financial statements to provide to FirstNational Bank and the purchasers of the common stock. Although Hanover conductedthe audit in conformity with its audit program, Hanover failed to detect material actsof embezzlement committed by Barton Corp.’s president. Hanover did not detect theembezzlement because of its inadvertent failure to exercise due care in designing theaudit program for this engagement.After completing the engagement, Hanover issued an unqualified opinion on Barton’sfinancial statements. The financial statements were relied upon by the purchasers ofthe common stock in deciding to purchase the shares. In…
Chapter 16 Solutions
EBK AUDITING & ASSURANCE SERVICES: A SY
Ch. 16 - Prob. 16.1RQCh. 16 - Prob. 16.2RQCh. 16 - Prob. 16.3RQCh. 16 - Prob. 16.4RQCh. 16 - Prob. 16.5RQCh. 16 - Prob. 16.6RQCh. 16 - Prob. 16.7RQCh. 16 - Prob. 16.8RQCh. 16 - Prob. 16.9RQCh. 16 - Prob. 16.10RQ
Ch. 16 - Prob. 16.11RQCh. 16 - Prob. 16.12MCQCh. 16 - Prob. 16.13MCQCh. 16 - Prob. 16.14MCQCh. 16 - Prob. 16.15MCQCh. 16 - Prob. 16.16MCQCh. 16 - Prob. 16.17MCQCh. 16 - Prob. 16.18MCQCh. 16 - Prob. 16.19MCQCh. 16 - Prob. 16.20MCQCh. 16 - Prob. 16.21MCQCh. 16 - Prob. 16.22MCQCh. 16 - Prob. 16.23MCQCh. 16 - Prob. 16.24PCh. 16 - Prob. 16.25PCh. 16 - Prob. 16.26PCh. 16 - Prob. 16.27PCh. 16 - Prob. 16.28PCh. 16 - Prob. 16.29PCh. 16 - Prob. 16.30P
Knowledge Booster
Similar questions
- The Absco Corporation has requested that Herb Germany, CPA,provide a report to the Northern State Bank as to the existence or nonexistence of certainloan conditions. The conditions to be reported on are the working capital ratio, dividendspaid on preferred stock, aging of accounts receivable, and competence of management.This is Herb’s first experience with Absco. Should Herb accept this engagement? Substantiate your answer.arrow_forwardDuring the auditor's risk assessment procedures, a meeting was held together withthe company's management. During the meeting, management has discussed thatthe company recently acquired bond securities from various government agenciesand publicly listed shares. In light of this, the audit senior asked the managementabout the company's investment policy, risk appetite and investment objectives. Theaudit senior's inquiry would most likely address which assertion? choices: Rights and obligationsOccurenceCompletenessValuationarrow_forwardYour answer is partially correct. As an auditor for the CPA firm of Hinkson and Calvert, you encounter the following situations in auditing different clients. 1. Windsor, Inc. is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing 3,000 shares of its $20 par value common stock. The owners' asking price for the land was $126,000, and the fair value of the land was $115,500. 2. Sheridan Company is a publicly held corporation whose common stock is traded on the securities markets. On June 1, it acquired land by issuing 20,000 shares of its $10 par value stock. At the time of the exchange, the land was advertised for sale at $268,500. The stock was selling at $11 per share. Prepare the journal entries for each of the situations above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the…arrow_forward
- Jaycom Enterprises has invested its excess cash in the bonds of several different companies and desires to maximize income over the short run. Jaycom is unsure about the appropriate investment policy and thus what reporting practice to follow. What classification procedure and subsequent classification could Jaycom follow in order to meet its objective? How will Jaycom justify its choice to the Jaycom auditors?arrow_forwardYour audit team is reviewing the third quarter financial statements of Smirks, Inc., a publicly traded company. The audit manager, Jason, thinks the client may have omitted an important item and has asked you to research whether interim financial statements are required to include earnings per share amounts. Prepare an email responding to Jason’s question. Comment on any other potential ramifications of Smirks, Inc.’s omission that come to mind, which you can offer to research. Please draft one email. Thank you.arrow_forwardDirections: Read the case below and answer the questions that follow.Whitehead, CPA, is planning the audit of a newly obtained client, Henderson Energy Corporation, for the year ended December 31, 2016. Henderson Energy is regulated by the state utility commission, and because it is a publicly traded company the audited financial statements must be filed with the Securities and Exchange Commission (SEC).Henderson Energy is considerably more profitable than many of its competitors, largely due to its extensive investment in information technologies used in its energy distribution and other key business processes. Recent growth into rural markets, however, has placed some strain on 2016 operations. Additionally, Henderson Energy expanded its investments into speculative markets and is also making greater use of derivative and hedging transactions to mitigate some of its investment risks. Because of the complexities of the underlying accounting associated with these activities, Henderson…arrow_forward
- Burton Howard, CFA, is an equity analyst with Maplewood Securities. Howard is preparinga research report on Confabulated Materials, SA, a publicly traded company based in Francethat complies with IFRS. As part of his analysis, Howard has assembled data gathered fromthe fi nancial statement footnotes of Confabulated’s 2009 Annual Report and from discussionswith company management. Howard is concerned about the eff ect of this information onConfabulated’s future earnings.Information about Confabulated’s investment portfolio for the years ended 31 December2008 and 2009 is presented in Exhibit 1. As part of his research, Howard is considering thepossible eff ect on reported income of Confabulated’s accounting classifi cation for fi xed incomeinvestments.EXHIBIT 1 Confabulated’s Investment Portfolio (€ Th ousands)Characteristic Bugle AG Cathay Corp Dumas SAClassifi cation Available-for-sale Held-to-maturity Held-to-maturityCost* €25,000 €40,000 €50,000Market value, 31 December 2008 29,000…arrow_forwardBurton Howard, CFA, is an equity analyst with Maplewood Securities. Howard is preparinga research report on Confabulated Materials, SA, a publicly traded company based in Francethat complies with IFRS. As part of his analysis, Howard has assembled data gathered fromthe fi nancial statement footnotes of Confabulated’s 2009 Annual Report and from discussionswith company management. Howard is concerned about the eff ect of this information onConfabulated’s future earnings.Information about Confabulated’s investment portfolio for the years ended 31 December2008 and 2009 is presented in Exhibit 1. As part of his research, Howard is considering thepossible eff ect on reported income of Confabulated’s accounting classifi cation for fi xed incomeinvestments.EXHIBIT 1 Confabulated’s Investment Portfolio (€ Th ousands)Characteristic Bugle AG Cathay Corp Dumas SAClassifi cation Available-for-sale Held-to-maturity Held-to-maturityCost* €25,000 €40,000 €50,000Market value, 31 December 2008 29,000…arrow_forwardBurton Howard, CFA, is an equity analyst with Maplewood Securities. Howard is preparinga research report on Confabulated Materials, SA, a publicly traded company based in Francethat complies with IFRS. As part of his analysis, Howard has assembled data gathered fromthe fi nancial statement footnotes of Confabulated’s 2009 Annual Report and from discussionswith company management. Howard is concerned about the eff ect of this information onConfabulated’s future earnings.Information about Confabulated’s investment portfolio for the years ended 31 December2008 and 2009 is presented in Exhibit 1. As part of his research, Howard is considering thepossible eff ect on reported income of Confabulated’s accounting classifi cation for fi xed incomeinvestments.EXHIBIT 1 Confabulated’s Investment Portfolio (€ Th ousands)Characteristic Bugle AG Cathay Corp Dumas SAClassifi cation Available-for-sale Held-to-maturity Held-to-maturityCost* €25,000 €40,000 €50,000Market value, 31 December 2008 29,000…arrow_forward
- Burton Howard, CFA, is an equity analyst with Maplewood Securities. Howard is preparinga research report on Confabulated Materials, SA, a publicly traded company based in Francethat complies with IFRS. As part of his analysis, Howard has assembled data gathered fromthe fi nancial statement footnotes of Confabulated’s 2009 Annual Report and from discussionswith company management. Howard is concerned about the eff ect of this information onConfabulated’s future earnings.Information about Confabulated’s investment portfolio for the years ended 31 December2008 and 2009 is presented in Exhibit 1. As part of his research, Howard is considering thepossible eff ect on reported income of Confabulated’s accounting classifi cation for fi xed incomeinvestments.EXHIBIT 1 Confabulated’s Investment Portfolio (€ Th ousands)Characteristic Bugle AG Cathay Corp Dumas SAClassifi cation Available-for-sale Held-to-maturity Held-to-maturityCost* €25,000 €40,000 €50,000Market value, 31 December 2008 29,000…arrow_forwardAs an auditor for the CPA firm of Hinkson and Calvert, you encounter the following situations in auditing different clients. 1. Bramble Corp. is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing 5,000 shares of its $19 par value common stock. The owners’ asking price for the land was $123,500, and the fair value of the land was $117,000. 2. Crane Company is a publicly held corporation whose common stock is traded on the securities markets. On June 1, it acquired land by issuing 21,000 shares of its $10 par value stock. At the time of the exchange, the land was advertised for sale at $275,000. The stock was selling at $11 per share. Prepare the journal entries for each of the situations above. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the…arrow_forwardyou have recently been appointed as auditor to Johnson Plc; a company whose shares are traded on the Stock Exchange. The Directors of Johnson Plc have recommended that you perform the following services . (i) The statutory audit of the annual financial statements. (ii) Taxation services, and (iii) Consistency services in respect of the implementation of a new information technology system Your firm has not acted for Johnson Plc before but does act as auditor for one of the major competitors. (a) Identify and explain the professional and ethical issues that should have been identified by your firm in relation to the provision of the services outlined above, and describe the safeguards that should be in place in order to address these issues. (including Citations/references) (b) What are the fundamental principles of ethics? Briefly explain their meaning (including Citations/references) (c) A client’s affairs should not be disclosed to third parties. However where a client has been…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education