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Misstatement of intangible assets (licences) due to incorrect amortisation
Match the audit risks given with the MOST appropriate response the auditor of Veryan Co should take.
actual answer: Calculate the expected amortisation
my answer: Inspect the licence agreement
maam inspecting the license agreement will STRAIGHTAWAY tell us the length of period for which the agreement has been signed and this will be the useful life of the license, so i dont understand why my answer is wrong?
Because to inspect the licence is primarily to confirm its existence/ownership and although that will indicate a term – you’d still have to make a calculation whether the amortisation is materially misstated.
Whereas to calculate what it should be immediately gives you a $ amount against which to make a comparison.
Note that “most” Qs should not be so subjective in the real exam
https://opentuition.com/topic/mtqs-gudance
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