Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 44FF
a.
To determine
Introduction: Auditor’s independence implies that auditors are required to be independent while conducting audit so that audit opinion is unbiased and is unaffected by the influence of others.
To explain: The reason due to which owning stock in client’s organization is considered as inappropriate.
b.
To determine
Introduction: Auditor’s independence implies that auditors are required to be independent while conducting audit so that the audit opinion is unbiased and is unaffected by the influence of others.
To examine: the reasons due to which it is important that auditors be independent of their clients.
c.
To determine
Introduction: Auditor’s independence implies that auditors are required to be independent while conducting audit so that audit opinion is unbiased and is unaffected by the influence of others.
To explain: The reason due to which Firm D took Auditor F’s actions so seriously.
d.
To determine
Introduction: Opportunity is referred as situations that increases the opportunity for a perpetrator to commit fraud and reduces the risk of getting caught. Weakness in internal controls and complex transactions are the basic factors which increases the opportunity to commit fraud.
To examine: The reasons due to which Auditor F has to make such poor professional and ethical decisions.
e.
To determine
Introduction: Auditor’s independence implies that auditors are required to be independent while conducting audit so that audit opinion is unbiased and is unaffected by the influence of others.
To explain: The procedures that a team member would undertake to report the inappropriate behavior while keeping the career protected.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
ACCOUNTING QUESTION
On January 1, 2025, XYZ Enterprises had the
following transactions:
1. The owner invested $50.000 in cash to
start the business.
2. Purchased office equipment for $12.000
on credit.
3. Paid $2,000 for January rent.
4. Provided services to a client and recived
$5,000 in cash.
5. Paid $3,000 to settle part of the office
equipment liability.
6. Received a utility bill for $600, to be paid
in February.
a) Record the journal entries for each of the
above transactions.
Carla Vista Leasing Company leases a new machine to Sandhill Corporation. The machine has a cost of $65,000 and fair value of
$94,500. Under the 3-year, non-cancelable contract, Sandhill will receive title to the machine at the end of the lease. The machine has
a 3-year useful life and no residual value. The lease was signed on January 1, 2025. Carla Vista expects to earn an 8% return on its
investment, and this implicit rate is known by Sandhill. The annual rentals are payable on each December 31, beginning December 31,
2025.
Click here to view factor tables.
(b).
Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g.
5,275.)
Interest (8%) Revenue/
Rent Receipt/Payment
Reduction of Principal
Expense
Receivable/Liability
(c)
Prepare the journal entry at commencement of the…
Assume that IBM leased equipment that was carried at a cost of $97,000 to Crane Company. The term of the lease is 5 years beginning
December 31, 2024, with equal rental payments of $30,200 beginning December 31, 2024. The fair value of the equipment at
commencement of the lease is $128,040. The equipment has a useful life of 5 years with no salvage value. The lease has an implicit
interest rate of 9%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable.
Prepare IBM's December 31, 2024, journal entries at commencement of the lease. (List all debit entries before credit entries. Credit
account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the
account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round
final answers to O decimal places e.g. 5,275.)
Click here to view…
Chapter 1 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 1 - Prob. 1CYBKCh. 1 - Prob. 2CYBKCh. 1 - Prob. 3CYBKCh. 1 - Prob. 4CYBKCh. 1 - Prob. 5CYBKCh. 1 - Prob. 6CYBKCh. 1 - Prob. 7CYBKCh. 1 - Prob. 8CYBKCh. 1 - Prob. 9CYBKCh. 1 - Prob. 10CYBK
Ch. 1 - Prob. 11CYBKCh. 1 - Prob. 12CYBKCh. 1 - Utilitarian theory holds that what is ethical is...Ch. 1 - Prob. 14CYBKCh. 1 - Which of the following statements related to...Ch. 1 - Utilitarianism does not require which of the...Ch. 1 - Prob. 17CYBKCh. 1 - Prob. 18CYBKCh. 1 - Prob. 19CYBKCh. 1 - Which of the following factors is not an example...Ch. 1 - Prob. 1RQSCCh. 1 - Prob. 2RQSCCh. 1 - Prob. 3RQSCCh. 1 - Prob. 4RQSCCh. 1 - Prob. 5RQSCCh. 1 - Prob. 6RQSCCh. 1 - Prob. 7RQSCCh. 1 - Prob. 8RQSCCh. 1 - Prob. 9RQSCCh. 1 - Prob. 10RQSCCh. 1 - Prob. 11RQSCCh. 1 - Prob. 12RQSCCh. 1 - Prob. 13RQSCCh. 1 - Prob. 14RQSCCh. 1 - Prob. 15RQSCCh. 1 - Prob. 16RQSCCh. 1 - Prob. 17RQSCCh. 1 - Prob. 18RQSCCh. 1 - Prob. 19RQSCCh. 1 - Prob. 20RQSCCh. 1 - Prob. 21RQSCCh. 1 - Prob. 22RQSCCh. 1 - Prob. 23RQSCCh. 1 - Prob. 24RQSCCh. 1 - Prob. 25RQSCCh. 1 - Prob. 26RQSCCh. 1 - Prob. 27RQSCCh. 1 - Prob. 28RQSCCh. 1 - Prob. 29RQSCCh. 1 - Prob. 30RQSCCh. 1 - Prob. 31RQSCCh. 1 - Refer to the Why It Matters feature “What Is...Ch. 1 - Prob. 33RQSCCh. 1 - Prob. 34RQSCCh. 1 - Prob. 35RQSCCh. 1 - Prob. 36RQSCCh. 1 - Prob. 37RQSCCh. 1 - As the auditor for XYZ Company, you discover that...Ch. 1 - Prob. 39RQSCCh. 1 - Prob. 40RQSCCh. 1 - Prob. 41RQSCCh. 1 - Prob. 42RQSCCh. 1 - Prob. 43FFCh. 1 - Prob. 44FFCh. 1 - Prob. 45FFCh. 1 - Prob. 46FF
Knowledge Booster
Similar questions
- Mary Leasing Company signs an agreement on January 1, 2025, to lease equipment to Crane Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2025, is $60,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $7,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $18,633.17 to the lessor, beginning on January 1, 2025. 5. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. 6. Crane uses the straight-line depreciation method for all equipment. Click here to view factor tables. Prepare all of the journal entries for the lessee for 2025 to record the lease agreement, the lease payments, and all expenses related to this lease.…arrow_forwardOn December 31, 2025, Sunland Corporation leased a plane from Bridgeport Company for a seven-year period expiring December 31, 2032. Equal annual payments of $456000 are due on December 31 of each year, beginning with December 31, 2025. The lease is properly classified as a finance lease on Sunland's books. The present value at December 31, 2025 of the eight lease payments over the lease term discounted at 9% is $2751026. Assuming the first payment is made on time, the amount that should be reported by Sunland Corporation as the lease liability on its December 31, 2025 balance sheet is $2295026. $2751026. $2501579. ○ $2542619.arrow_forwardBlossom Company leases a machine from Blue Corp. under an agreement that meets the criteria to be a finance lease for Blossom. The six-year lease requires payment of $180000 at the beginning of each year, which includes $26000 per year for maintenance, insurance, and taxes. The incremental borrowing rate for the lessee is 11%; the lessor's implicit rate is 9% and is known by the lessee. The present value of an annuity due of 1 for six years at 11% is 4.69590. The present value of an annuity due of 1 for six years at 9% is 4.88965. Blossom should record the leased asset at ○ $880137. $845262. $753006. ○ $723169.arrow_forward
- The basic difference between a direct-financing lease and a sales-type lease is the recognition of the profit on the sale. O allocation of initial direct costs by the lessor to periods benefited by the lease arrangements. amount of the depreciation recorded each year by the lessor. manner in which rental receipts are recorded as rental income.arrow_forwardWhich of the following describes the lease term test? ○ If the asset has an alternative use during the lease term, it is a finance lease. ○ If there is a bargain purchase option during the lease term, it is a finance lease. ○ If the lease term is 75% or more of the economic life, it is a finance lease. ○ If the lease term is 90% or more of the economic life, it is a finance lease.arrow_forward1. What type of leases does Best Buy[use? 2. What amount of operating leases were reported by Best Buy? 3. What is the financial line item in the balance sheet that reports the leases (operating /finance) at Best Buy? 4. What other important disclosure about leases did you find in the notes to financial statements at Best Buy?arrow_forward
- Your boss tells you that she is considering a capital project, a piece of production equipment, that will cost $400,000 but will generate estimated cash flow of $100,000, $100,000, $150,000, $150,000, and $200,000 in Years 1 thru 5 respectively. She naively states that the money invested will be recovered early in Year 4 so it must be a good project. Explain capital budgeting to her generally and the overall objectives. Walk us through the process you would recommend to her for making a decision about this project and tell me what would be your recommendation on this capital project. What are the numbers telling you? How did you make the decision and why?arrow_forwardAn auditor will be using positive confirmations as part of testing the client’s accounts receivable. In which of the following situations would the use of positive confirmations generally be inappropriate? A. During the prior year’s audit there were several material accounts receivable balances that were in dispute between the customer and the client. B. The majority of the client’s accounts contain small receivable balances. C. The auditor believes that a number of the confirmations returned may contain exceptions. D. Preliminary tests performed indicate that the client’s internal control over accounts receivable is weak.arrow_forwardhe role of the business analyst is to which of the following? Interpreterradio button unchecked1 of 3 Developerradio button unchecked2 of 3 Decision-makerradio button unchecked3 of 3arrow_forward
- Question ately describes the skew of this dataset? w many outliers are there in this dataset? this dataset that is not an outlier? (Round to 2 decimal places.) rst bin in the histogram (the one with the values from $2.52 to $20.52)? ately describes the median and mean for this dataset? Answer It is skewed to the right (positive skew).arrow_forwardQuestion ately describes the skew of this dataset? w many outliers are there in this dataset? this dataset that is not an outlier? (Round to 2 decimal places.) rst bin in the histogram (the one with the values from $2.52 to $20.52)? ately describes the median and mean for this dataset? Answer It is skewed to the right (positive skew).arrow_forwardThe following information is available for the pension plan of Blossom Company for the year 2025. Actual and expected return on plan assets Benefits paid to retirees Contributions (funding) Interest/discount rate Prior service cost amortization Projected benefit obligation, January 1, 2025 Service cost (a) Compute pension expense for the year 2025. (b) Pension expense for 2025 $ $15,000 39,300 84,400 10% 8,100 490,000 56,600 98700 i Prepare the journal entry to record pension expense and the employer's contribution to the pension plan in 2025. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Pension Expense Pension Asset/Liability Cash Plan Amendment (PSC) Debit 98700 Credit 14300 84400arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning