(ii) On 1 July 2006 Petrie introduced a 10-year warranty on all sales of its entire range of stainless steelcookware. Sales of stainless steel cookware for the year ended 31 March 2007 totalled $18·2 million. Thenotes to the financial statements disclose the following:‘Since 1 July 2006, the company’s stainless steel cookware is guaranteed to be free from defects inmaterials and workmanship under normal household use within a 10-year guarantee period. No provisionhas been recognised as the amount of the obligation cannot be measured with sufficient reliability.’(4 marks)Your auditor’s report on the financial statements for the year ended 31 March 2006 was unmodified.Required:Identify and comment on the implications of these two matters for your auditor’s report on the financialstatements of Petrie Co for the year ended 31 March 2007.NOTE: The mark allocation is shown against each of the matters above.
(ii) On 1 July 2006 Petrie introduced a 10-year warranty on all sales of its entire range of stainless steel
cookware. Sales of stainless steel cookware for the year ended 31 March 2007 totalled $18·2 million. The
notes to the financial statements disclose the following:
‘Since 1 July 2006, the company’s stainless steel cookware is guaranteed to be free from defects in
materials and workmanship under normal household use within a 10-year guarantee period. No provision
has been recognised as the amount of the obligation cannot be measured with sufficient reliability.’
(4 marks)
Your auditor’s report on the financial statements for the year ended 31 March 2006 was unmodified.
Required:
Identify and comment on the implications of these two matters for your auditor’s report on the financial
statements of Petrie Co for the year ended 31 March 2007.
NOTE: The mark allocation is shown against each of the matters above.
相关考题：
In 20×8,following events related to Entity A were noted:(1)Entity A sells goods with a warranty under which customers are covered for the cost of repairs of any manufacturing defects that become apparent within the first twelve months after purchase If minor defects were detected in all products sold, repair costs of RMB 6 000 000 would result. Entity A’s past experience and future expectations indicate that ,for the coming year,60 per cent of the goods sold in 20×8 will have minor defects and 10 per cent of the goods sold in 20×8 will have major defects.(2)In November20×8,a customer sued Entity A and made a claim for damages of RMB 2 500 000,as Entity A failed to deliver the goods to the customer in time according to the delivery term of relevant sales contract. When Entity A prepared the financial statements for the year ended 31 December 20×8,its lawyers advised that it was probable that Entity a Would be found liable for making a payment of RMB 2 000 000 to the customer for compensation.（3）Under new environment protection legislation, Entity A is required to fit smoke filters, which costs about RMB20 000 000,to its factories by 30 June 2008.Entity A has not fitted the smoke filters at 31 December 2008.Based on the best estimate of the management of Entity A, it is more likely that Entity A will be imposed a penalty of RMB 10 000 000.（4）Entity A is required by law to overhaul its equipments once three years. The estimated remaining useful life of the equipments is 18 years. Entity A just spent RMB 6 000 000 in overhauling is equipments in 2007.（5）Entity A entered into a sales contract with a customer in November 2008 to sell an equipment at the price of RMB 50 000 000.According to the sales contract, Entity A shall deliver the equipments to the customer in the end of 2009 and the amount of penalty is RMB 600 000 if Entity A or the customer fail to fulfill the contract. Entity A’s original estimated cost of fulfilling the sales contract is about RMB 45 000 000.However,due to the increase of the purchase prices of relevant raw materials, the estimated cost of fulfilling the sales contract increased to RMB 55 000 000 in the end of 2008.No inventory has been prepared by Entity A for the production of the equipment by the end of 2008.Requirement:According to the events described above, determine whether any provision should be recognized in Entity A’s financial statement for the year ended 31 December 2008.If any provision should be recognized, calculate the amount of provision and prepare related journal entries.
11 The following information is available for Orset, a sole trader who does not keep full accounting records:$Inventory 1 July 2004 138,60030 June 2005 149,100Purchases for year ended 30 June 2005 716,100Orset makes a standard gross profit of 30 per cent on sales.Based on these figures, what is Orset’s sales figure for the year ended 30 June 2005?A $2,352,000B $1,038,000C $917,280D $1,008,000
(ii) Explain the accounting treatment under IAS39 of the loan to Bromwich in the financial statements ofAmbush for the year ended 30 November 2005. (4 marks)
(iv) Tyre recently undertook a sales campaign whereby customers can obtain free car accessories, by presenting acoupon, which has been included in an advertisement in a national newspaper, on the purchase of a vehicle.The offer is valid for a limited time period from 1 January 2006 until 31 July 2006. The management are unsureas to how to treat this offer in the financial statements for the year ended 31 May 2006.(5 marks)Required:Advise the directors of Tyre on how to treat the above items in the financial statements for the year ended31 May 2006.(The mark allocation is shown against each of the above items)
(b) Describe with suitable calculations how the goodwill arising on the acquisition of Briars will be dealt with inthe group financial statements and how the loan to Briars should be treated in the financial statements ofBriars for the year ended 31 May 2006. (9 marks)
(c) At 1 June 2006, Router held a 25% shareholding in a film distribution company, Wireless, a public limitedcompany. On 1 January 2007, Router sold a 15% holding in Wireless thus reducing its investment to a 10%holding. Router no longer exercises significant influence over Wireless. Before the sale of the shares the net assetvalue of Wireless on 1 January 2007 was $200 million and goodwill relating to the acquisition of Wireless was$5 million. Router received $40 million for its sale of the 15% holding in Wireless. At 1 January 2007, the fairvalue of the remaining investment in Wireless was $23 million and at 31 May 2007 the fair value was$26 million. (6 marks)Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.Required:Discuss how the above items should be dealt with in the group financial statements of Router for the year ended31 May 2007.
(b) (i) Discusses the principles involved in accounting for claims made under the above warranty provision.(6 marks)(ii) Shows the accounting treatment for the above warranty provision under IAS37 ‘Provisions, ContingentLiabilities and Contingent Assets’ for the year ended 31 October 2007. (3 marks)Appropriateness of the format and presentation of the report and communication of advice. (2 marks)
2 The draft financial statements of Rampion, a limited liability company, for the year ended 31 December 2005included the following figures:$Profit 684,000Closing inventory 116,800Trade receivables 248,000Allowance for receivables 10,000No adjustments have yet been made for the following matters:(1) The company’s inventory count was carried out on 3 January 2006 leading to the figure shown above. Salesbetween the close of business on 31 December 2005 and the inventory count totalled $36,000. There were nodeliveries from suppliers in that period. The company fixes selling prices to produce a 40% gross profit on sales.The $36,000 sales were included in the sales records in January 2006.(2) $10,000 of goods supplied on sale or return terms in December 2005 have been included as sales andreceivables. They had cost $6,000. On 10 January 2006 the customer returned the goods in good condition.(3) Goods included in inventory at cost $18,000 were sold in January 2006 for $13,500. Selling expenses were$500.(4) $8,000 of trade receivables are to be written off.(5) The allowance for receivables is to be adjusted to the equivalent of 5% of the trade receivables after allowing forthe above matters, based on past experience.Required:(a) Prepare a statement showing the effect of the adjustments on the company’s net profit for the year ended31 December 2005. (5 marks)
(ii) Illustrate the benefit of revising the corporate structure by calculating the corporation tax (CT) payablefor the year ended 31 March 2006, on the assumptions that:(1) no action is taken; and(2) an amended structure as recommended in (i) above is implemented from 1 June 2005. (3 marks)
(ii) Assuming the new structure is implemented with effect from 1 August 2006, calculate the level ofmanagement charge that should be made by Bold plc to Linden Limited for the year ended 31 July2007, so as to minimise the group’s overall corporation tax (CT) liability for that year. (2 marks)
(ii) Calculate the corporation tax (CT) payable by Tay Limited for the year ended 31 March 2006, takingadvantage of all available reliefs. (3 marks)
(b) Explain why making sales of Sabals in North America will have no effect on Nikau Ltd’s ability to recover itsinput tax. (3 marks)Notes: – you should assume that the corporation tax rates and allowances for the financial year to 31 March 2007will continue to apply for the foreseeable future.– you should ignore indexation allowance.
(ii) Explain how the inclusion of rental income in Coral’s UK income tax computation could affect theincome tax due on her dividend income. (2 marks)You are not required to prepare calculations for part (b) of this question.Note: you should assume that the tax rates and allowances for the tax year 2006/07 and for the financial year to31 March 2007 will continue to apply for the foreseeable future.
(c) During the year Albreda paid $0·1 million (2004 – $0·3 million) in fines and penalties relating to breaches ofhealth and safety regulations. These amounts have not been separately disclosed but included in cost of sales.(5 marks)Required:For each of the above issues:(i) comment on the matters that you should consider; and(ii) state the audit evidence that you should expect to find,in undertaking your review of the audit working papers and financial statements of Albreda Co for the year ended30 September 2005.NOTE: The mark allocation is shown against each of the three issues.
(b) On 1 April 2004 Volcan introduced a ‘reward scheme’ for its customers. The main elements of the rewardscheme include the awarding of a ‘store point’ to customers’ loyalty cards for every $1 spent, with extra pointsbeing given for the purchase of each week’s special offers. Customers who hold a loyalty card can convert theirpoints into cash discounts against future purchases on the basis of $1 per 100 points. (6 marks)Required:For each of the above issues:(i) comment on the matters that you should consider; and(ii) state the audit evidence that you should expect to find,in undertaking your review of the audit working papers and financial statements of Volcan for the year ended31 March 2005.NOTE: The mark allocation is shown against each of the three issues.
(b) You are an audit manager with specific responsibility for reviewing other information in documents containingaudited financial statements before your firm’s auditor’s report is signed. The financial statements of Hegas, aprivately-owned civil engineering company, show total assets of $120 million, revenue of $261 million, and profitbefore tax of $9·2 million for the year ended 31 March 2005. Your review of the Annual Report has revealedthe following:(i) The statement of changes in equity includes $4·5 million under a separate heading of ‘miscellaneous item’which is described as ‘other difference not recognized in income’. There is no further reference to thisamount or ‘other difference’ elsewhere in the financial statements. However, the Management Report, whichis required by statute, is not audited. It discloses that ‘changes in shareholders’ equity not recognized inincome includes $4·5 million arising on the revaluation of investment properties’.The notes to the financial statements state that the company has implemented IAS 40 ‘Investment Property’for the first time in the year to 31 March 2005 and also that ‘the adoption of this standard did not have asignificant impact on Hegas’s financial position or its results of operations during 2005’.(ii) The chairman’s statement asserts ‘Hegas has now achieved a position as one of the world’s largestgenerators of hydro-electricity, with a dedicated commitment to accountable ethical professionalism’. Auditworking papers show that 14% of revenue was derived from hydro-electricity (2004: 12%). Publiclyavailable information shows that there are seven international suppliers of hydro-electricity in Africa alone,which are all at least three times the size of Hegas in terms of both annual turnover and population supplied.Required:Identify and comment on the implications of the above matters for the auditor’s report on the financialstatements of Hegas for the year ended 31 March 2005. (10 marks)
3 You are the manager responsible for the audit of Keffler Co, a private limited company engaged in the manufacture ofplastic products. The draft financial statements for the year ended 31 March 2006 show revenue of $47·4 million(2005 – $43·9 million), profit before taxation of $2 million (2005 – $2·4 million) and total assets of $33·8 million(2005 – $25·7 million).The following issues arising during the final audit have been noted on a schedule of points for your attention:(a) In April 2005, Keffler bought the right to use a landfill site for a period of 15 years for $1·1 million. Kefflerexpects that the amount of waste that it will need to dump will increase annually and that the site will becompletely filled after just ten years. Keffler has charged the following amounts to the income statement for theyear to 31 March 2006:– $20,000 licence amortisation calculated on a sum-of-digits basis to increase the charge over the useful lifeof the site; and– $100,000 annual provision for restoring the land in 15 years’ time. (9 marks)Required:For each of the above issues:(i) comment on the matters that you should consider; and(ii) state the audit evidence that you should expect to find,in undertaking your review of the audit working papers and financial statements of Keffler Co for the year ended31 March 2006.NOTE: The mark allocation is shown against each of the three issues.
(c) In April 2006, Keffler was banned by the local government from emptying waste water into a river because thewater did not meet minimum standards of cleanliness. Keffler has made a provision of $0·9 million for thetechnological upgrading of its water purifying process and included $45,000 for the penalties imposed in ‘otherprovisions’. (5 marks)Required:For each of the above issues:(i) comment on the matters that you should consider; and(ii) state the audit evidence that you should expect to find,in undertaking your review of the audit working papers and financial statements of Keffler Co for the year ended31 March 2006.NOTE: The mark allocation is shown against each of the three issues.
(b) You are the audit manager of Johnston Co, a private company. The draft consolidated financial statements forthe year ended 31 March 2006 show profit before taxation of $10·5 million (2005 – $9·4 million) and totalassets of $55·2 million (2005 – $50·7 million).Your firm was appointed auditor of Tiltman Co when Johnston Co acquired all the shares of Tiltman Co in March2006. Tiltman’s draft financial statements for the year ended 31 March 2006 show profit before taxation of$0·7 million (2005 – $1·7 million) and total assets of $16·1 million (2005 – $16·6 million). The auditor’sreport on the financial statements for the year ended 31 March 2005 was unmodified.You are currently reviewing two matters that have been left for your attention on the audit working paper files forthe year ended 31 March 2006:(i) In December 2004 Tiltman installed a new computer system that properly quantified an overvaluation ofinventory amounting to $2·7 million. This is being written off over three years.(ii) In May 2006, Tiltman’s head office was relocated to Johnston’s premises as part of a restructuring.Provisions for the resulting redundancies and non-cancellable lease payments amounting to $2·3 millionhave been made in the financial statements of Tiltman for the year ended 31 March 2006.Required:Identify and comment on the implications of these two matters for your auditor’s reports on the financialstatements of Johnston Co and Tiltman Co for the year ended 31 March 2006. (10 marks)
(b) Seymour offers health-related information services through a wholly-owned subsidiary, Aragon Co. Goodwill of$1·8 million recognised on the purchase of Aragon in October 2004 is not amortised but included at cost in theconsolidated balance sheet. At 30 September 2006 Seymour’s investment in Aragon is shown at cost,$4·5 million, in its separate financial statements.Aragon’s draft financial statements for the year ended 30 September 2006 show a loss before taxation of$0·6 million (2005 – $0·5 million loss) and total assets of $4·9 million (2005 – $5·7 million). The notes toAragon’s financial statements disclose that they have been prepared on a going concern basis that assumes thatSeymour will continue to provide financial support. (7 marks)Required:For each of the above issues:(i) comment on the matters that you should consider; and(ii) state the audit evidence that you should expect to find,in undertaking your review of the audit working papers and financial statements of Seymour Co for the year ended30 September 2006.NOTE: The mark allocation is shown against each of the three issues.
3 You are the manager responsible for the audit of Lamont Co. The company’s principal activity is wholesaling frozenfish. The draft consolidated financial statements for the year ended 31 March 2007 show revenue of $67·0 million(2006 – $62·3 million), profit before taxation of $11·9 million (2006 – $14·2 million) and total assets of$48·0 million (2006 – $36·4 million).The following issues arising during the final audit have been noted on a schedule of points for your attention:(a) In early 2007 a chemical leakage from refrigeration units owned by Lamont caused contamination of some of itsproperty. Lamont has incurred $0·3 million in clean up costs, $0·6 million in modernisation of the units toprevent future leakage and a $30,000 fine to a regulatory agency. Apart from the fine, which has been expensed,these costs have been capitalised as improvements. (7 marks)Required:For each of the above issues:(i) comment on the matters that you should consider; and(ii) state the audit evidence that you should expect to find,in undertaking your review of the audit working papers and financial statements of Lamont Co for the year ended31 March 2007.NOTE: The mark allocation is shown against each of the three issues.
(b) While the refrigeration units were undergoing modernisation Lamont outsourced all its cold storage requirementsto Hogg Warehousing Services. At 31 March 2007 it was not possible to physically inspect Lamont’s inventoryheld by Hogg due to health and safety requirements preventing unauthorised access to cold storage areas.Lamont’s management has provided written representation that inventory held at 31 March 2007 was$10·1 million (2006 – $6·7 million). This amount has been agreed to a costing of Hogg’s monthly return ofquantities held at 31 March 2007. (7 marks)Required:For each of the above issues:(i) comment on the matters that you should consider; and(ii) state the audit evidence that you should expect to find,in undertaking your review of the audit working papers and financial statements of Lamont Co for the year ended31 March 2007.NOTE: The mark allocation is shown against each of the three issues.
(c) Lamont owns a residential apartment above its head office. Until 31 December 2006 it was let for $3,000 amonth. Since 1 January 2007 it has been occupied rent-free by the senior sales executive. (6 marks)Required:For each of the above issues:(i) comment on the matters that you should consider; and(ii) state the audit evidence that you should expect to find,in undertaking your review of the audit working papers and financial statements of Lamont Co for the year ended31 March 2007.NOTE: The mark allocation is shown against each of the three issues.
(b) You are the audit manager of Petrie Co, a private company, that retails kitchen utensils. The draft financialstatements for the year ended 31 March 2007 show revenue $42·2 million (2006 – $41·8 million), profit beforetaxation of $1·8 million (2006 – $2·2 million) and total assets of $30·7 million (2006 – $23·4 million).You are currently reviewing two matters that have been left for your attention on Petrie’s audit working paper filefor the year ended 31 March 2007:(i) Petrie’s management board decided to revalue properties for the year ended 31 March 2007 that hadpreviously all been measured at depreciated cost. At the balance sheet date three properties had beenrevalued by a total of $1·7 million. Another nine properties have since been revalued by $5·4 million. Theremaining three properties are expected to be revalued later in 2007. (5 marks)Required:Identify and comment on the implications of these two matters for your auditor’s report on the financialstatements of Petrie Co for the year ended 31 March 2007.NOTE: The mark allocation is shown against each of the matters above.
The following trial balance relates to Sandown at 30 September 2009:The following notes are relevant:(i) Sandown’s revenue includes $16 million for goods sold to Pending on 1 October 2008. The terms of the sale are that Sandown will incur ongoing service and support costs of $1·2 million per annum for three years after the sale. Sandown normally makes a gross profit of 40% on such servicing and support work. Ignore the time value of money.(ii) Administrative expenses include an equity dividend of 4·8 cents per share paid during the year.(iii) The 5% convertible loan note was issued for proceeds of $20 million on 1 October 2007. It has an effective interest rate of 8% due to the value of its conversion option.(iv) During the year Sandown sold an available-for-sale investment for $11 million. At the date of sale it had acarrying amount of $8·8 million and had originally cost $7 million. Sandown has recorded the disposal of theinvestment. The remaining available-for-sale investments (the $26·5 million in the trial balance) have a fair value of $29 million at 30 September 2009. The other reserve in the trial balance represents the net increase in the value of the available-for-sale investments as at 1 October 2008. Ignore deferred tax on these transactions.(v) The balance on current tax represents the under/over provision of the tax liability for the year ended 30 September 2008. The directors have estimated the provision for income tax for the year ended 30 September 2009 at $16·2 million. At 30 September 2009 the carrying amounts of Sandown’s net assets were $13 million in excess of their tax base. The income tax rate of Sandown is 30%.(vi) Non-current assets:The freehold property has a land element of $13 million. The building element is being depreciated on astraight-line basis.Plant and equipment is depreciated at 40% per annum using the reducing balance method.Sandown’s brand in the trial balance relates to a product line that received bad publicity during the year which led to falling sales revenues. An impairment review was conducted on 1 April 2009 which concluded that, based on estimated future sales, the brand had a value in use of $12 million and a remaining life of only three years.However, on the same date as the impairment review, Sandown received an offer to purchase the brand for$15 million. Prior to the impairment review, it was being depreciated using the straight-line method over a10-year life.No depreciation/amortisation has yet been charged on any non-current asset for the year ended 30 September2009. Depreciation, amortisation and impairment charges are all charged to cost of sales.Required:(a) Prepare the statement of comprehensive income for Sandown for the year ended 30 September 2009.(13 marks)(b) Prepare the statement of financial position of Sandown as at 30 September 2009. (12 marks)Notes to the financial statements are not required.A statement of changes in equity is not required.
What is acceptable flame screening ________．A.A fitted single brass screen of 10 x 10 meshB.A fitted stainless steel screen of 30 x 30 meshC.A fitted single stainless steel screen of 15 x 15 meshD.Two fitted brass screens of 10 x 15 mesh spaced 1/2 inch apart
单选题The stainless steel bars are painted by（）.AlotBlotsCa lotDthe lots