Auditing is an independent examination of financial statements. The set of financial statements includes balance sheet, income statement, statement of owner’s equity, and statement of cash flows. The audit is performed by an independent auditor. Understanding the client, its business and internal control: The auditor takes the understanding of the client business and internal control to plan its audit procedures. To indicate: The type of enquiries about a perspective client an auditor should make to third parties.

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Answer 1

Question

Chapter 3, Problem 3.1RQ

To determine

Concept Introduction:

Auditing is an independent examination of financial statements. The set of financial statements includes balance sheet, income statement, statement of owner’s equity, and statement of cash flows. The audit is performed by an independent auditor.

Understanding the client, its business and internal control: The auditor takes the understanding of the client business and internal control to plan its audit procedures.

To indicate: The type of enquiries about a perspective client an auditor should make to third parties.

Expert Solution & Answer

Explanation of Solution

Understanding the characteristics of an entity’s business model is the first task of the preliminary engagement activities performed by the auditor at the time of accepting the audit engagement. The auditor takes the understanding of the client business and internal control to plan its audit procedures. On the basis of his knowledge of the business and internal control, the auditor determines the nature, timing, and the extent of the audit procedures.

The auditor can also enquire to third parties about a perspective client to know more about the client. The auditor may ask the client’s creditor / lenders about the credibility of its previous financial statements and repayment practices of the client. This will help the auditors to know the possible areas of misstatement related to third parties.

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I mistakenly submitted blurr image please don't answer . comment please i will write values.

Assume that the following statements of financial position are stated and a book value. Alpha Corporation Current Assets $15,000 Current Liabilities $5,400 Net Fixed Assets 39,000 Long-Term Debt 10,100   Equity 38,500     $54,000   $54,000 Beta Corporation Current Assets $3,600 Current Liabilities $1,400 Net Fixed Assets 6,700 Long-Term Debt 2,100     Equity 6,800   $10,300   $10,300 Suppose the fair market value of Beta’s fixed assets is $9,500 rather than the $6,700 book value shown. Alpha pays $17,300 for Beta and raises the needed funds through an issue of long-term debt. Construct the post-merger statement of financial position now, assuming that the purchase method of accounting is used.

The shareholders of Barley Corporation have voted in favor of a buyout offer from Wheat Corporation. Information about each firm is given here: Barley Wheat Price/earnings ratio 13.5 21 Shares outstanding 90,000 210,000 Earnings $180,000 $810,000 Barley shareholders will receive one share of Wheat stock for every three shares they hold of Barley. Required What will the EPS of Wheat be after the merger? What will be the P/E ratio if the NPV of the acquisition is 0? What must Wheat feel is the value of the synergy between these two firms? Explain how your answer can be reconciled with the decision to go ahead with the takeover?

Answer 2

Question

Chapter 3, Problem 3.1RQ

To determine

Concept Introduction:

Auditing is an independent examination of financial statements. The set of financial statements includes balance sheet, income statement, statement of owner’s equity, and statement of cash flows. The audit is performed by an independent auditor.

Understanding the client, its business and internal control: The auditor takes the understanding of the client business and internal control to plan its audit procedures.

To indicate: The type of enquiries about a perspective client an auditor should make to third parties.

Expert Solution & Answer

Explanation of Solution

Understanding the characteristics of an entity’s business model is the first task of the preliminary engagement activities performed by the auditor at the time of accepting the audit engagement. The auditor takes the understanding of the client business and internal control to plan its audit procedures. On the basis of his knowledge of the business and internal control, the auditor determines the nature, timing, and the extent of the audit procedures.

The auditor can also enquire to third parties about a perspective client to know more about the client. The auditor may ask the client’s creditor / lenders about the credibility of its previous financial statements and repayment practices of the client. This will help the auditors to know the possible areas of misstatement related to third parties.

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Answer 3

Question

Chapter 3, Problem 3.1RQ

To determine

Concept Introduction:

Auditing is an independent examination of financial statements. The set of financial statements includes balance sheet, income statement, statement of owner’s equity, and statement of cash flows. The audit is performed by an independent auditor.

Understanding the client, its business and internal control: The auditor takes the understanding of the client business and internal control to plan its audit procedures.

To indicate: The type of enquiries about a perspective client an auditor should make to third parties.

Expert Solution & Answer

Explanation of Solution

Understanding the characteristics of an entity’s business model is the first task of the preliminary engagement activities performed by the auditor at the time of accepting the audit engagement. The auditor takes the understanding of the client business and internal control to plan its audit procedures. On the basis of his knowledge of the business and internal control, the auditor determines the nature, timing, and the extent of the audit procedures.

The auditor can also enquire to third parties about a perspective client to know more about the client. The auditor may ask the client’s creditor / lenders about the credibility of its previous financial statements and repayment practices of the client. This will help the auditors to know the possible areas of misstatement related to third parties.

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Answer 4

Question

Chapter 3, Problem 3.1RQ

To determine

Concept Introduction:

Auditing is an independent examination of financial statements. The set of financial statements includes balance sheet, income statement, statement of owner’s equity, and statement of cash flows. The audit is performed by an independent auditor.

Understanding the client, its business and internal control: The auditor takes the understanding of the client business and internal control to plan its audit procedures.

To indicate: The type of enquiries about a perspective client an auditor should make to third parties.

Expert Solution & Answer

Explanation of Solution

Understanding the characteristics of an entity’s business model is the first task of the preliminary engagement activities performed by the auditor at the time of accepting the audit engagement. The auditor takes the understanding of the client business and internal control to plan its audit procedures. On the basis of his knowledge of the business and internal control, the auditor determines the nature, timing, and the extent of the audit procedures.

The auditor can also enquire to third parties about a perspective client to know more about the client. The auditor may ask the client’s creditor / lenders about the credibility of its previous financial statements and repayment practices of the client. This will help the auditors to know the possible areas of misstatement related to third parties.

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Answer 5

Chapter 3, Problem 3.1RQ

To determine

Concept Introduction:

Auditing is an independent examination of financial statements. The set of financial statements includes balance sheet, income statement, statement of owner’s equity, and statement of cash flows. The audit is performed by an independent auditor.

Understanding the client, its business and internal control: The auditor takes the understanding of the client business and internal control to plan its audit procedures.

To indicate: The type of enquiries about a perspective client an auditor should make to third parties.

Expert Solution & Answer

Explanation of Solution

Understanding the characteristics of an entity’s business model is the first task of the preliminary engagement activities performed by the auditor at the time of accepting the audit engagement. The auditor takes the understanding of the client business and internal control to plan its audit procedures. On the basis of his knowledge of the business and internal control, the auditor determines the nature, timing, and the extent of the audit procedures.

The auditor can also enquire to third parties about a perspective client to know more about the client. The auditor may ask the client’s creditor / lenders about the credibility of its previous financial statements and repayment practices of the client. This will help the auditors to know the possible areas of misstatement related to third parties.

Answer 6

Chapter 3, Problem 3.1RQ

To determine

Concept Introduction:

Auditing is an independent examination of financial statements. The set of financial statements includes balance sheet, income statement, statement of owner’s equity, and statement of cash flows. The audit is performed by an independent auditor.

Understanding the client, its business and internal control: The auditor takes the understanding of the client business and internal control to plan its audit procedures.

To indicate: The type of enquiries about a perspective client an auditor should make to third parties.

Expert Solution & Answer

Explanation of Solution

Understanding the characteristics of an entity’s business model is the first task of the preliminary engagement activities performed by the auditor at the time of accepting the audit engagement. The auditor takes the understanding of the client business and internal control to plan its audit procedures. On the basis of his knowledge of the business and internal control, the auditor determines the nature, timing, and the extent of the audit procedures.

The auditor can also enquire to third parties about a perspective client to know more about the client. The auditor may ask the client’s creditor / lenders about the credibility of its previous financial statements and repayment practices of the client. This will help the auditors to know the possible areas of misstatement related to third parties.

Answer 7

Chapter 3, Problem 3.1RQ

To determine

Concept Introduction:

Auditing is an independent examination of financial statements. The set of financial statements includes balance sheet, income statement, statement of owner’s equity, and statement of cash flows. The audit is performed by an independent auditor.

Understanding the client, its business and internal control: The auditor takes the understanding of the client business and internal control to plan its audit procedures.

To indicate: The type of enquiries about a perspective client an auditor should make to third parties.

Answer 8

Expert Solution & Answer

Explanation of Solution

Understanding the characteristics of an entity’s business model is the first task of the preliminary engagement activities performed by the auditor at the time of accepting the audit engagement. The auditor takes the understanding of the client business and internal control to plan its audit procedures. On the basis of his knowledge of the business and internal control, the auditor determines the nature, timing, and the extent of the audit procedures.

The auditor can also enquire to third parties about a perspective client to know more about the client. The auditor may ask the client’s creditor / lenders about the credibility of its previous financial statements and repayment practices of the client. This will help the auditors to know the possible areas of misstatement related to third parties.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 3 - Prob. 3.1RQ Ch. 3 - Prob. 3.2RQ Ch. 3 - Prob. 3.3RQ Ch. 3 - Prob. 3.4RQ Ch. 3 - Prob. 3.5RQ Ch. 3 - Prob. 3.6RQ Ch. 3 - Prob. 3.7RQ Ch. 3 - Prob. 3.8RQ Ch. 3 - Prob. 3.9RQ Ch. 3 - Prob. 3.10RQ

Explanation of Solution

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