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professor so does this mean that if IP is measured at cost model, then its cost less depreciation will be the deemed cost for PPE(under both cost model and revaluation model), if there is a change of use and asset becomes PPE FROM IP?
query 1: Professor instead of writing the following line:
“Compare the prior year provision with the actual level of claims in the year, to assess the reasonableness of the judgements made by management.”
if we instead write the following:
“compare the opening balance of provision (estimate for the current year) to actual claims in the current year to assess reasonableness of judgments made by management”
Do both of them end up conveying the same thing(/are interchangeable)?
query 2: I got your numerical example professor. but I am still for some reason not clear with this original sentence: “Compare the prior year provision with the actual level of claims in the year, to assess the reasonableness of the judgements made by management.”
here we are comparing prior yr provision with actual level of claims in PRIOR YR OR CURRENT YR(i suppose it will be prior yr actual claims)? Basically trying to see if management has a trend of overstating or understating the provision expense, and hence the odds that this yr too they are overstating/understating the provision ?
professor i feel really embarrassed to ask this, but the opening $3000 is what we estimated will be our outflow in the current year, correct? and similarly $4000 is what we predict will be our outflow in the next year?
And hence the $4000 for next is a gross understatement given the warranty claims of current yr of $13000?
Ok so what you are trying to say is that during perpetual count we physically inspect the inventory at least once a yr and then for the rest of the months to reporting date we place reliance on inventory system/records?
if significant adjustment were required during perpetual count then FULL yr end count will be required, and that(full yr end count) will be carried out through physical inspection?
part 2 of my query:
just one more thing professor, won’t the loss allowance be this, immediately before sale or the date when we got to know NRV of inventory C(before sale of actual inventory):
DR. inventory(SPL) 90
Cr. inventory (SOFP) 90after sale:
Dr. cash and inventory(SPL) 60
cr. inventory(SOFP) 60Ahhh so in your last paragraph you basically mean to say that difference between “writing down(akin to loss allowance)” and “writing off” is that former is an accounting estimate and can be reversed if need be, whereas latter is complete removal of an item which cannot be reversed no matter what, is my comprehension correct?
No offence professor but i don’t think he’s asking from the point of view of marks here.
We know that examiner’s answers are not exhaustive, but when we write points that are different from the examiner/novel, it becomes essential to at least know whether those points hold some substance and are reasonable.
If only it was that easy for us to discern professor…
professor books of prime entry is the location where ledger accounts of suppliers and customers exist on an individual basis, right? Like Ledger account of B customer or C supplier, so all transactions with that entity basically.
and at the end of each day total sales or purchases are posted to respective control accounts, which are included as a part of general ledger, true maam? General ledger includes only control accounts? or they include something else too?
Am sorry maam for asking such a silly doubt, but there has been a long gap since i last finished my F3 paper!
query 3)
in the 3rd TOC the kit states that:
“Undertake a sequence check of GRNs held by the accounts department and discuss any missing items with the accounts clerk.”
why can’t the external auditor just:
“REVIEW whether all GRNs are sequentially numbered and have a proof of evidence in the form of signature that sequential check was undertaken by accounts department.”
I get a little confused ma’am as to when the auditor should “REVIEW” and when “UNDERTAKE” a certain activity themselves. Is there any exhaustive list which provides some definite guidance of what should be done, when a certain type of activity takes place/doesnt take place?
query 2)
Professor is there any specific reason why they have not mentioned the CONTROL DEFICIENCY related to LACK OF SEQUENTIAL NUMBERING of purchase orders processed by Oliver Dancer? because if Purchase orders are not sequentially numbered then Mr. Oliver could miss out on certain purchase orders leading to stock outs/manufacturing delays.
got it professor!
Just one small doubt, if a clerk is responsible for say bank reconciliations, then for any unreconciled amounts can we suggest (as a part of TOC) that “enquire with the clerk if he prepared an exception report.”
Professor i don’t understand the rational as to why the client might want to reimburse the auditors, unless the client was the one that asked the auditors to issue an unmodified opinion despite the irregularities and malpractices in client’s business, in which case it should be illegal to pay the auditors any sum.
professor i think the audit procedure you explain for 5000 bottles is more applicable when we have to check the EXISTENCE of physical inventory.
For checking the COMPLETENESS of records, we will randomly pick a sample a of boxes (each filled with 50 bottles) with unique identifier and then cross reference with the records to see if records are complete, right?
moreover professor, i had another doubt related to this. Can nomination committee members nominate themselves to the board?
How MANY MARKS of any SBR paper randomly selected from the bank will include content covered in technical articles?
Yes Professor, this area of current issue is also very very confusing!! can you pls brief us?
should not it be zero?
Moreover i have doubt related to tax base of lease liability also- what will be its tax base if lease liability is not allowed for by the local tax jurisdiction?
sir just in case FV given is different from the probability multiplying result then we choose FV?
sir if you are saying that SPL never shows realised gains/losses then what will be the difference between SPL and OCI?? what makes OCI different from SPL is that the former shows unrealised gains/(losses) while the latter shows realised gains/losses, except for the few exceptions that i could think of
like why can’t we transfer that balacane existing in other components of equity to retained earnings (distributable reserve)?
