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Sir,
for b(i)” Audit procedure in respect of the valuation of WIP”The third bullet point of the examiner answer
1.How to agree the stage of completion of the job to records?How it’s going to work?for b(ii) “Audit procedure in respect of recognition and measurement of the government grant”
The last second point
2.if We already know that the amt will be recognised in the SOFP is $8m (deferred),why we want to recalculate the amt?
Thank you.
1. Read the para about the manufacture of machines – imagine a piece of equipment that is built over 6-12 weeks. There will be stages of completion – “part B can’t go there until part A goes there” – the business must have some recognised costing methodology which includes measuring work-in-progress – which the auditor should be able to agree. (i.e. % completion isn’t just a number plucked out of thin air).
2. $8m deferred is subject to $2m compensation for wages and salaries which may not be an exact amount (hence need to confirm this in preceding bullets).
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