Assume That the Audit Team Notes the Client Has Made

question 113

Multiple Choice

Assume that the audit team notes the client has made a significant change in its product line which requires that new equipment be purchased.Which of the following would be of greatest concern to the auditor?

• A)Inappropriate book value of new equipment.
• B)Impaired value of new equipment.
• C)Impaired value of old equipment.
• D)Inappropriate depreciation calculation for new equipment.

---

Definitions:

Full Cost Method

The full cost method is an accounting practice used in the oil and gas industry to capitalize all costs associated with finding and developing oil and gas reserves, regardless of the outcome of those efforts.

Larger Cost Centre

An organizational unit or function within a business responsible for managing significant cost allocations for monitoring and optimizing resource usage.

AASB 6/IFRS 6 Disclosure

Requirements related to the exploration for and evaluation of mineral resources, detailing financial reporting standards for these activities.

E&E Assets

Exploration and Evaluation Assets, specific to the extractive industries, representing capital expenditures on the exploration and evaluation of mineral resources.