In Testing Acquisitions the Auditor Needs to Understand the Appropriate

question 32

Multiple Choice

In testing acquisitions the auditor needs to understand the appropriate accounting guidance related to acquisition accounting. Which of the following is not an accounting consideration for the auditor as regards to acquisition cost?

• A) inclusion of material transportation and installation costs
• B) recording of trade-in costs
• C) allocating costs when building and equipment are purchased at one price
• D) verifying that purchased equipment amounts correspond to the budgeted amount

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Definitions:

Synapsids

A group of animals that includes mammals and their extinct relatives, characterized by a single temporal fenestra (an opening in the skull behind each eye).

Reptiles

Cold-blooded vertebrates characterized by scales or hard plates, such as snakes, turtles, and lizards, that reproduce mostly through eggs.

Modern-Day Mammals

Contemporary species of the mammalian class, characterized by features such as hair, three middle ear bones, and mammary glands for feeding young.

Paleontologists

Scientists who study the history of life on Earth through the examination of fossilized remains and traces of organisms.