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Oh I see..
Please may I know in what level auditors can stop correcting errors? When the misstated figures are lower than Performance Materiality, or something else?
Thank you.
Oh I see.
That means in every audit, the Performance Materiality threshold must be determined. The higher the audit risk, the lower the Performance Materiality threshold, and vice versa, just like Overall Materiality, but only smaller?
Thank you.
Oh I see. This means that if a company pays dividends to the shareholders, the company pays the cash eventually out of their reserve, and therefore, Dr Dividend Expense; Cr Cash. Then at the end of year, Dr Retained Earnings; Cr Dividend Expense (because “Retained Earning” is the “Revenue Reserve” to “pay dividends”)?
If a company (a shareholder) receives dividend, then Dr Cash; Cr Dividend Income only because it is just an “other income” which will be presented in SOPL which will in turn affect the net profit or loss at the bottommost part of SOPL?
Is this correct? Thank you.
1. So what will be the correct double entry?
2. If they pay the market value which is higher, the double entry becomes Dr OSC; Dr Share Premium; Cr Cash?
Thank you.
Oh I see. How about the following:
1. If Company X buys shares from Company Y, X becomes the shareholders of Y. So, when dividend is received by X, the double entry is firstly Dr Cash; Cr Dividend (other income), and at the end of year it will be Dr Dividend; Cr Retaining Earnings?
2. If Company M issues shares, it will get the money in return from the investors (who paid for the shares). So, the entry is Dr Cash; Cr Ordinary Share Capital (OSC)? And when later on M decides to buy back the shares, then the entry will be Dr OSC; Cr Cash?
Thank you.
Oh I see.. which means that if management cannot provide certain documentation to prove that a transaction is genuine (perhaps they have lost the documentation), the auditors will need to disclaim the opinion (instead of asserting the transaction via representation letter as an alternative)?
Thank you.
Hi, I have read through the Chapter 28 (Written Representation). That means in short, written representation is only prepared for events that involves “assumptions” and high “subjectivity”, not excluding uncertain management plans, potential litigation, fraud, subsequent events, management’s intentions, and going concern assessment?
Also, in the sentence “Management representations cannot substitute for other audit evidence or performing audit procedures in accordance with ISAs.” Please may I know what does this mean?
Thank you.
Thank you! By the way, please may I know for the Proposal 2, how to get the amount of Dr Current Asset 117.96 & Cr Reserves 117.96? Thanks..
Oh, that means in the case scenario above, since the company mentioned that it is able to pay for the issue costs out of cash reserves, that means that the company now has no problem in paying for the cost of the project because they are confident that they can settle the debt, and hence, there is no need to gross up the amount?
Oh.. for Lahla/Kawa scenario, it is about the NUMBER of shares. As for the A/B scenario above (3 A shares for 2 B shares), it is about the VALUE of shares. So, that’s the difference, am I right? 🙂
For Past Year March/June 2021, sample answer Section A, Appendix 3, under share-for-share offer, please may I know why the additional shares issued by Lahla Co is calculated as 2,000m / 3 = 667m? The 2,000m is the Kawa Co’s number of shares.. isn’t it supposed to be Lahla Co’s number of shares divided by 3, since it is 1 Lahla share for 3 Kawa shares?
Thank you.