[badala2015]

IAS 38 Intangible Assets
Scenario:Developing costs of $5m capitalized for a software that hacks into government system.
Audit Evidence/Procedures:PIRATE

Probable economic benefits- Market research
Intention to complete- board minutes/written representation
Resources-Cash flow forecast/Budget
Ability to sell/use-Legal correspondence
Technical Feasibility study-results of the prototype
Expenses reliable measurement-Break down of the $5/supporting documents(invoices)

[badala2015]

Dear Mike

my attempt has used the risk of material misstatement as the driver and used the standard as back-up’
‘
GOT IT.

There is a risk of material misstatement arising from the translation of transactions from foreign currency to the reporting currency

Purchases, like all line items in the statement of profit or loss, should be translated at the rate that obtained on the date of the transaction (an average rate may be used as a close approximation)

If an inappropriate rate has been used, the cost of sales figure could be materially misstated

This could result in a major distortion of the key ratios of gross and net profitability

Similarly, assets and liabilities could be materially misstated on the statement of financial position if they have been translated at any rate other than closing rate as required by the standard’

How many marks does this answer score?

And I could use your help with the answer structure for a business risk from the above scenario in my first post.

[badala2015]

Thanks so much for taking your time off to respond to my question.

‘You’re looking for 12 sentences, 2 – 3 lines each, each one of them containing ONE markable point’
GOT IT

Would this answer guarantee me marks:
RISK OF MATERIAL MISSTATEMENT
In accordance to IAS 21-effects of foreign exchange,income and expenses denominated in foreign currency should be re translated at the average rate
Assets and liabilities should denominated in foreign currency should be re translated at the closing rate.
There is a risk that purchases are misstated because an inappropriate foreign exchange rate has been used for re translation purposes.
Is this answer structure appropriate where?
1.The accounting standard with the all the requirements indicated
2.Stating the effect of breaching the standard with the following words understated or overstated’

If YES then thats the reason I over ran on time.

How would you answer the my above answer in 2-3 lines

and what would be your answer(2-3lines) for a business risk with the following points raised above

[Author]

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