Ballpark Distributors, Inc

question 23

Essay

Ballpark Distributors, Inc. is a large public company with a calendar year end that distributes sports memorabilia to various retailers. Ballpark conducted an inventory count on November 30 of the year being audited. Instead of conducting another inventory count at year end, the company decided to estimate the year-end inventory using a sample of the year-end inventory on hand. The company uses a perpetual inventory system and feels that sampling to estimate the year-end inventory will produce a reliable financial statement amount.
Required:
Assume that the auditor observed and tested Ballpark's physical inventory count on
November 30, and was satisfied that the count and resulting adjustments produced
an appropriate inventory account balance on November 30.
(a)What roll-forward procedures between the inventory count date and year end
might the auditor perform?
(b)What additional tests of details of balances can the auditor perform?

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Definitions:

IFRS

International Financial Reporting Standards, which are a set of accounting rules used globally to prepare financial statements.

Revaluation Method

An accounting strategy used to adjust the book value of a fixed asset to reflect its current market value.

IFRS

International Financial Reporting Standards, a set of global accounting guidelines developed by the International Accounting Standards Board, providing uniform financial statement reporting.

Tangible Long-Lived Assets

Physical assets that are used in the operations of a business, have a useful life of more than one year, and are not intended for resale.