AC 410 All Assignments
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of the asset may not be recoverable. As a result, management<br />
developed an estimate of the fair value of the location using a<br />
discounted cash flow model. The estimated fair value of the location<br />
was determined to be $1.5 million, which resulted in an impairment<br />
loss of about $500,000. The undiscounted future cash flows are equal<br />
to $1.7 million.<br />
Problem 13-34<br />
The following are typical questions that might appear on an internal<br />
control questionnaire relating to plant and equipment:<br />
Are subsidiary ledgers for plant and equipment regularly reconciled<br />
with general ledger controlling accounts?<br />
State the purpose of each of the above controls.<br />
Describe the manner in which each of the above procedures might be<br />
tested.<br />
Assuming that the operating effectiveness of each of the above<br />
procedures is found to be inadequate, describe how the auditors might<br />
alter their substantive procedures to compensate for the increased<br />
level of risks of material misstatements.<br />
<strong>AC</strong> <strong>410</strong> Unit 7 Homework Assignment
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