Deck 13: Audit of Long-Lived Assets and Related Expense Accounts

Question 1

When testing a client's additions to an asset for research and development, the auditor does not test the capitalisation of all new natural resources.

Answer 1

False

Question 2

Auditors will perform an analysis of leases using AASB 117 criteria to substantiate the accounting treatment.

Answer 2

True

Question 3

AASB 117 requires that lease agreements are treated as capital leases if specific criteria apply.

Answer 3

True

Question 4

Which of the following assertions is not addressed by examining purchase agreements and minutes of board of directors meeting?

A) existence
B) rights
C) valuation
D) completeness

Question 5

Property plant & equipment evidence - Additions
Specify the evidence the auditor would review to satisfy himself or herself about each of the following assertions concerning property, plant, and equipment additions.
A. Valuation at historical cost
B. Existence
C. Presentation on balance sheet
D. Rights

Question 6

Capital leases
Identify the five criteria that have been provided under AASB 117 that the auditor will use to assess capital lease treatment.