Exam 12: Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Internal controls over fixed assets should provide reasonable assurance that all purchases are authorized and reasonably valued.

The obsolescence of long-lived assets is an inherent risk that should be considered by the auditor.

If the auditor is testing the reasonableness of depreciation expense for the year, which assertion is being tested?

Which of the following information should be included in management's documentation regarding intangible assets?

Estimating the amount of reclamation costs are an inherent risk associated with natural resources.

Auditors will perform an analysis of leases using FASB's Codified Standards (ASC) criteria to substantiate the accounting treatment.

Effective internal controls over long-lived assets include the use of identification tags secured to assets for proper tracking.

As natural resources are used up the client has to recognize which of the following types of expense?

Long-lived assets typically represent the smallest single category of assets in many organizations.

Which one of the following is not a management assertion relevant to long-lived assets?

Gains on the sale of equipment usually indicate that the depreciation lives of the assets are too long.

Intangible assets - patents. Define what is meant by the term intangible asset, provide an example and identify typical controls over intangible assets.

If the auditor is testing long-lived asset account balances to see if they include all relevant transactions that have taken place during the period, what is the primary assertion being tested?

Which one of the following factors is not an inherent risk associated with long-lived assets?

In a tour of a client's manufacturing facility, the auditor is most likely attempting to satisfy which of the following management assertions related to long-lived assets?

The auditor would be most likely to request a schedule of repairs and maintenance expense to satisfy the auditor about the existence of long-lived assets.

Which of the following is a term used to describe management's recognition that a significant portion of fixed assets is no longer as productive as had originally been expected?

Which of the following controls related to management's asset impairment judgments does the auditor need to understand?

An inherent risk related to asset impairment is management is not typically interested in writing down the asset value.

If a company has only a few long-lived assets of relatively high value, the most efficient approach for an auditor would be to use tests of details for obtaining evidence.