The audit of Liverpool Ltd had been completed and the audit senior for the engagement prepared items for discussion.He argues that the following list of accounting changes violate the consistency qualitative characteristic of accounting information.As audit manager,which of the following items do you think are worthy of discussion with the audit partner?
1.After five years of using straight-line depreciation for reporting purposes and accelerated depreciation for tax purposes,the entity decided to adopt accelerated depreciation for reporting purposes.
2.The company uses an inventory valuation method that is different from the method used by other companies in the industry.
3.The estimated remaining useful life of an asset was reduced due to the increase in volume of use of the asset.
4.The company disposed of a subsidiary that had been included in the financial reports in prior years.
5.The company wrote off equipment due to obsolescence.

Question

Quizplus · Accepted Answer

The Answer of The audit of Liverpool Ltd had been completed and the audit senior for the engagement prepared items for discussion.He argues that the following list of accounting changes violate the consistency qualitative characteristic of accounting information.As audit manager,which of the following items do you think are worthy of discussion with the audit partner?
1.After five years of using straight-line depreciation for reporting purposes and accelerated depreciation for tax purposes,the entity decided to adopt accelerated depreciation for reporting purposes.
2.The company uses an inventory valuation method that is different from the method used by other companies in the industry.
3.The estimated remaining useful life of an asset was reduced due to the increase in volume of use of the asset.
4.The company disposed of a subsidiary that had been included in the financial reports in prior years.
5.The company wrote off equipment due to obsolescence.

The Audit of Liverpool Ltd Had Been Completed and the Audit