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Based on my knowledge the main assertions for NCA are existence, rights and obligations, valuation and completeness.
Could you please tell me do we confirm assertion “Valuation” by below mentioned substantive procedure?
Review the nature of the additions to confirm that revenue expenditure has not been capitalized in error.
Thank you in advance,
Valuation: NCA’s should be depreciated over their estimated useful lives, so oyu have to make sure that is being done. Sometime, eg if an asset is not being used, it has to be written down more quickly – a process known as impairment.
It is making sure that repairs (should be expensed) have not bee treated as additions. Repairs restore profit earning capacity of an NCA; additions enhance it.
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