Quiz - Ppe Cost
Quiz - Ppe Cost
1. Which of the following accounts would most likely be reviewed by the auditor to gain reasonable assurance
that additions to the equipment account are not understated?
a. Repairs and maintenance expense. b. Depreciation expense.
c. Gain on disposal of equipment. d. Accounts payable.
2. The most significant audit step in substantiating additions to the office furniture account balance is
a. Examination of vendors' invoices and receiving reports for current year's acquisitions.
b. Review of transactions near the balance sheet date for proper period cutoff.
c. Calculation of ratio of depreciation expense to gross office equipment cost.
d. Comparison to prior year's acquisitions.
3. An auditor is verifying the existence of newly acquired fixed assets recorded in the accounting records.
Which of the following is the best evidence to help achieve this objective?
a. Documentary support obtained by vouching entries to subsidiary records and invoices.
b. Physical examination of a sample of newly recorded fixed assets.
c. Oral evidence obtained by discussions with operating management.
d. Documentary support obtained by reviewing titles and tax returns.
4. When there are few property and equipment transactions during the year, the continuing auditor usually
makes a
a. Complete review of the related internal controls and assesses control risk relative to them.
b. Complete review of the related internal controls and performs analytical review tests to verify
current year additions to property and equipment.
c. Preliminary review of the related internal controls and performs a thorough examination of the
balances at the beginning of the year.
d. Preliminary review of the related internal controls and performs extensive tests of current year
property and equipment transactions.
5. An auditor analyzes repairs and maintenance accounts primarily to obtain evidence in support of the audit
assertion that all
a. Non-capitalizable expenditures for repairs and maintenance have been properly charged to
expense.
b. Expenditures for property and equipment have not been charged to expense.
c. Non-capitalizable expenditures for repairs and maintenance have been recorded in the proper
period.
d. Expenditures for property and equipment have been recorded in the proper period.
Problem 1
Aliaga Corporation was incorporated on January 2, 2017. The following items relate to the Aliaga’s property and
equipment transactions:
QUESTIONS:
Based on the above and the result of your audit, determine the following:
1. Cost of land
a. ₱2,980,000 b. ₱3,270,000 c. ₱3,185,000 d. ₱3,205,000
2. Cost of building
a. ₱10,810,000 b. ₱10,895,000 c. ₱10,875,000 d. ₱11,110,000
Problem 2
The property, plant and equipment section of Zaragosa Corporation’s statement of financial position at
December 31, 2009 included the following items:
Land ₱2,100,000
Land improvements 560,000
Buildings 3,600,000
Machinery and equipment 6,600,000
During 2010 the following data were available to you upon your analysis of the accounts:
QUESTIONS:
Based on the above and the result of your audit, compute for the following as of December 31, 2010:
1. Land
a. ₱30,000,000 b. ₱14,000,000 c. ₱29,900,000 d. ₱29,600,000
2. Land Improvements
a. ₱1,300,000 b. ₱1,000,000 c. ₱1,250,000 d. ₱560,000
3. Building
a. ₱12,300,000 b. ₱11,750,000 c. ₱12,000,000 d. ₱11,700,000