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Hi sir, for September 2016 exam paper, for question 18b) , for the audit risk that states ”
“In September 20X5, the company invested $0·9 million in a complex piece of plant and machinery. The costs include purchase price, installation and training costs. As per IAS 16 Property, Plant and Equipment, the cost of an asset incudes its purchase price and directly attributable costs only. Training costs are not permitted under IAS 16 to be capitalized as part of the cost and therefore plant and machinery and profits are overstated.
for the auditor’s response in relation to this audit risk , my answers are slightly different. can I state the following ?
” Obtain a breakdown of the $0·9 million expenditure and undertake testing to confirm the level of training costs which have been included within non-current assets. Discuss the accounting treatment with the finance director and request management to remove the training costs from plant and machinery and profits”
Will my answers be accepted ?
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