In Testing Acquisitions, the Auditor Must Understand the Relevant Accounting

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• inclusion of material transportation and installation costs as part of the asset's acquisition cost
• failure to properly record the trade-in of existing equipment
• client's capitalization policy to determine whether acquisitions are treated consistently with those of the preceding year
• examine whether the client has the right to record the equipment as an asset (Capitalization of leased equipment or classification of the equipment as an operating lease)
• Correct classification among various equipment accounts
• Improper inclusion of transactions that should be recorded as assets in repairs and maintenance expense, lease expense, supplies, small tools, and similar accounts

In Testing Acquisitions, the Auditor Must Understand the Relevant Accounting

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