Question

In: Accounting

Sally Pearson has just completed testing of the depreciation of property, plant and equipment for her...

Sally Pearson has just completed testing of the depreciation of property, plant and equipment for her client Happy Grapple Ltd.

   Information from the draft financial report of Happy Grapple shows (rounded to $000s):

Profit before tax                                $2 737

Property, plant and equipment       $16 564

   In testing depreciation, Sally selected a sample of 35 items with a value of $1 672 000 and had established a tolerable error was 5% of base values.

   The result of the tests showed systematic errors in the sample of $72 400 and Sally has concluded that this is an acceptable error and no further audit work is required.

Required

You are Sally’s manager and are reviewing her work, do you agree with her assessment?

Solutions

Expert Solution

In case of any doubt please comment below.

Thank you. Please upvote it.......


Related Solutions

John has just completed testing of the depreciation of property, plant and equipment for his client...
John has just completed testing of the depreciation of property, plant and equipment for his client Happy Grapple Ltd. Information from the draft financial report of Happy Grapple shows (rounded to $000s): Profit before tax                                $2 737 Property, plant and equipment       $16 564 In testing depreciation, John selected a sample of 35 items with a value of $1 672 000 and had established a tolerable error was 5% of base values. The result of the tests showed systematic...
CASE 9‐6 Depreciation Accounting Property, plant, and equipment (plant assets) generally represent a material portion of...
CASE 9‐6 Depreciation Accounting Property, plant, and equipment (plant assets) generally represent a material portion of the total assets of most companies. Accounting for the acquisition and use of such assets is therefore an important part of the financial reporting process. Required: Distinguish between revenue and capital expenditures, and explain why this distinction is important. Briefly define depreciation as used in accounting. Identify the factors that are relevant in determining the annual depreciation, and explain whether these factors are determined...
Sally is a new patient to the clinic and has just tested posative pregnacy test. Her...
Sally is a new patient to the clinic and has just tested posative pregnacy test. Her freind andrea is an employee of the medical clinic and ran into sally and her hsband at the store. andrea congradualtes her freind sally and her husband on the pregnancy. Little did andrea know that sally and her husband been having marital problems and been sleeping in seperte roomswhat did andrea do wrong and how should she have approached sally and her husband?
Acquisition and Disposition of Property, Plant, and Equipment
BE10.7 (LO 3) Fielder Company obtained land by issuing 2,000 shares of its $10 par value common stock. The land was recently appraised at $85,000. The common stock is actively traded at $40 per share. Prepare the journal entry to record the acquisition of the land.BE10.8 (LO 3) Navajo Corporation traded a used truck (cost $20,000, accumulated depreciation $18,000) for a small computer with a fair value of $3,300. Navajo also paid $500 in the transaction. Prepare the journal entry...
Acquisition and Disposition of Property, Plant, and Equipment
BE10.10 (LO 3) Mehta Company traded a used welding machine (cost $9,000, accumulated depreciation $3,000) for offi ce equipment with an estimated fair value of $5,000. Mehta also paid $3,000 cash in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)BE10.11 (LO 3) Cheng Company traded a used truck for a new truck. The used truck cost $30,000 and has accumulated depreciation of $27,000. The new truck is worth $37,000. Cheng also made a...
Acquisition and Disposition of Property, Plant, and Equipment
BE10.14 (LO 5) Ottawa Corporation owns machinery that cost $20,000 when purchased on July 1, 2017. Depreciation has been recorded at a rate of $2,400 per year, resulting in a balance in accumulated depreciation of $8,400 at December 31, 2020. The machinery is sold on September 1, 2021, for $10,500. Prepare journal entries to (a) update depreciation for 2021 and (b) record the sale.E10.1 (LO 1) (Acquisition Costs of Realty) The following expenditures and receipts are related to land, land...
Acquisition and Disposition of Property, Plant, and Equipment
BE10.12 (LO 3) Slaton Corporation traded a used truck for a new truck. The used truck cost $20,000 and has accumulated depreciation of $17,000. The new truck is worth $35,000. Slaton also made a cash payment of $33,000. Prepare Slaton’s entry to record the exchange. (The exchange has commercial substance.)BE10.13 (LO 4) Indicate which of the following costs should be expensed when incurred.a. $13,000 paid to rearrange and reinstall machinery.b. $200,000 paid for addition to building.c. $200 paid for tune-up...
Property, plant, and equipment, at cost: Land. . . . . . . . . ....
Property, plant, and equipment, at cost: Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . $140,000 Buildings. . . . . . . . . . . . . . . . . . . . . . . . 700,000 Less: Accumulated depreciation. . . . . . (344,000) Equipment. . . . . . . . . . ....
At January 1, 2017, Blossom Company reported the following property, plant, and equipment accounts: Accumulated depreciation-buildings...
At January 1, 2017, Blossom Company reported the following property, plant, and equipment accounts: Accumulated depreciation-buildings $60,400,000 Accumulated depreciation-equipment 53,500,000 Buildings Equipment Land 97,600,000 150,000,000 21,850,000 The company uses straight-line depreciation for buildings and equipment, its year-end is December 31, and it makes adjusting entries annually. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value During 2017, the following selected transactions...
At January 1, 2022, Sandhill Co. reported the following property, plant, and equipment accounts: Accumulated depreciation—buildings...
At January 1, 2022, Sandhill Co. reported the following property, plant, and equipment accounts: Accumulated depreciation—buildings $60,700,000 Accumulated depreciation—equipment 54,600,000 Buildings 97,400,000 Equipment 150,800,000 Land 21,000,000 The company uses straight-line depreciation for buildings and equipment, its year-end is December 31, and it makes adjustments annually. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value. During 2022, the following selected transactions occurred:...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT