A partial balance sheet for BCS,Inc.for December 31,2012 and December 31,2011 is provided below.You are working on the audit for the 12/31/12 year-end.The 12/31/11 balance sheet numbers were audited by your CPA firm last year.Use the partial balance sheet for BCS provided below.You have been assigned to audit the land,building,and equipment accounts. a.During the year the company purchased land for $1,000,000.What was the cost of land sold during the year?
b.Can you determine if the land was sold for a gain or a loss? How would you calculate the gain or loss on sale?
c.During the year,the company sold one building and did not purchase any additional buildings.The building sold for $200,000.$60,000 of depreciation had been taken on the building up to the point of the sale.What was the amount of the gain or loss on the sale?
d.If buildings are depreciated over 25 years on a straight-line basis,is the amount of depreciation expense taken in 2012 on the buildings reasonable? Show your calculations to support your answer.e.What audit procedures would you perform to determine that the $1,000,000 assigned to the purchase of the land was correct?
f.What is the GAAP rule for recording fixed asset purchases?
g.What is the GAAP rule for valuing fixed assets at year-end?

Question

A partial balance sheet for BCS,Inc.for December 31,2012 and December 31,2011 is provided below.You are working on the audit for the 12/31/12 year-end.The 12/31/11 balance sheet numbers were audited by your CPA firm last year.Use the partial balance sheet for BCS provided below.You have been assigned to audit the land,building,and equipment accounts.  a.During the year the company purchased land for $1,000,000.What was the cost of land sold during the year?
b.Can you determine if the land was sold for a gain or a loss? How would you calculate the gain or loss on sale?
c.During the year,the company sold one building and did not purchase any additional buildings.The building sold for $200,000.$60,000 of depreciation had been taken on the building up to the point of the sale.What was the amount of the gain or loss on the sale?
d.If buildings are depreciated over 25 years on a straight-line basis,is the amount of depreciation expense taken in 2012 on the buildings reasonable? Show your calculations to support your answer.e.What audit procedures would you perform to determine that the $1,000,000 assigned to the purchase of the land was correct?
f.What is the GAAP rule for recording fixed asset purchases?
g.What is the GAAP rule for valuing fixed assets at year-end?

Quizplus · Accepted Answer

The Answer of A partial balance sheet for BCS,Inc.for December 31,2012 and December 31,2011 is provided below.You are working on the audit for the 12/31/12 year-end.The 12/31/11 balance sheet numbers were audited by your CPA firm last year.Use the partial balance sheet for BCS provided below.You have been assigned to audit the land,building,and equipment accounts.  a.During the year the company purchased land for $1,000,000.What was the cost of land sold during the year?
b.Can you determine if the land was sold for a gain or a loss? How would you calculate the gain or loss on sale?
c.During the year,the company sold one building and did not purchase any additional buildings.The building sold for $200,000.$60,000 of depreciation had been taken on the building up to the point of the sale.What was the amount of the gain or loss on the sale?
d.If buildings are depreciated over 25 years on a straight-line basis,is the amount of depreciation expense taken in 2012 on the buildings reasonable? Show your calculations to support your answer.e.What audit procedures would you perform to determine that the $1,000,000 assigned to the purchase of the land was correct?
f.What is the GAAP rule for recording fixed asset purchases?
g.What is the GAAP rule for valuing fixed assets at year-end?

A Partial Balance Sheet for BCS,Inc