The Fieldwork for the December 31,2016 Audit of Schmidt Corporation

question 108

Short Answer

The fieldwork for the December 31,2016 audit of Schmidt Corporation ended on March 17,2017.The financial statements and auditor's report were issued on March 29,2017.In each of the material situations (1 through 5)below,indicate the appropriate action (a,b,c).The possible actions are as follows
a. Adjust the December 31,2016 financial statements.
b. Disclose the information in a footnote in the December 31,2016 financial statements.
c. No action is required.
The situations are as follows:
________ 1.On March 1,2017,one of Schmidt Corporation's major customers declared bankruptcy.The customer's financial condition in 2016 was deteriorating and they owed Schmidt Corporation a large sum of money as of the balance sheet date.
________ 2.On February 17,2017,Schmidt Corporation sold some machinery for its book value.
________ 3.On February 20,2017 a flood destroyed the entire uninsured inventory in one of Schmidt's warehouses.
________ 4.On January 5,2017,there was a significant decline in the market value of the securities held for resale from their value as of the balance sheet date.
________ 5.On March 10,2017,the company settled a lawsuit at an amount significantly higher than the amount recorded as a liability on the books as of the balance sheet date.

---

Definitions:

Social Darwinism

Spencer’s assertion that societies evolve according to the same principles as do biological organisms.

Sociological Imagination

Sociological Imagination is the ability to see the connection between personal experiences and larger social forces, recognizing that individual challenges are often influenced by broader societal issues.

George Herbert-Mead

A sociologist known for his work on the development of the self and the concept of social behaviorism, emphasizing the importance of communication and symbolic interactions in society.

The I

In sociology, refers to the subjective and spontaneous part of the self that represents personal responses and actions in social interaction.