Exam 13: Property,plant,and Equipment: Depreciation and Depletion

During the audit of Wilson Company,Stephanie Kersten,a staff member on the audit,identified a number of items that have been included as additions to property,plant,and equipment.Kersten has indicated to you that he believes the following items should not be capitalized.Indicate with an "X" whether you believe the item should be capitalized or expensed. Item Capitalize Expense A. Repainting of the primary bottling machine. B. Rearrangement of equipment to increase efficiency of operations in the future. Repairs of the primary bottling machine. These repairs bring operating speed of the C. machine back to where it was prior to the repair. D. Modification of packaging equipment to increase its operating speed by approximately 40 \% . E. Replanting grass around the plant to replace grass that had died due to frost damage.

An auditor has identified numerous debits to accumulated depreciation of equipment.Which of the following is most likely?

In the examination of property,plant,and equipment,the auditor tries to determine all of the following except the:

When performing an audit of the property,plant,and equipment accounts,an auditor should expect which of the following to be most likely to indicate a departure from generally accepted accounting principles?

Auditors should obtain evidence that there are no significant amounts of unrecorded retirements of property,plant,and equipment. a.Describe two ways that the auditors obtain evidence that there are no significant amounts of unrecorded retirements of property (land). b.Describe three ways that the auditors obtain evidence that there are no significant amounts of unrecorded retirements of equipment.

The auditors are least likely to learn of retirements of equipment through which of the following?

The primary purpose of internal control over plant and equipment is to safeguard the assets from theft.

Which of the following best describes the auditors' approach to the audit of the ending balance of property,plant,and equipment for a continuing nonpublic client?

Which of the following is not one of the auditors' objectives in auditing depreciation?

Which of the following is the most important control procedure over acquisitions of property,plant,and equipment?

Property acquisitions that are misclassified as maintenance expense would most likely be detected by an internal control system that provides for:

A typical procedure in the audit of property is examination of public records to verify the ownership of the property.

When comparing an initial audit with a subsequent year audit for a particular client,the scope of audit procedures for which of the following accounts would be expected to decrease the most?

The auditors may expect a proper debit to goodwill due to:

The audit procedure of analyzing the repairs and maintenance accounts is primarily designed to provide evidence in support of the audit proposition that all

Which of the following is the best evidence of continuous ownership of property?

Which of the following is not a test primarily used to test property,plant and equipment accounts for overstatement?

Which of the following policies is an internal control weakness related to the acquisition of factory equipment?

Which of the following best describes the auditors' typical observation of plant and equipment?

To strengthen internal control over the custody of heavy mobile equipment,the client would most likely institute a policy requiring a periodic