Chapter 8: SP - Tangible NCA

Question 1

Additions (5)

Answer 1

• Obtain list and agree (Fixed asset schedule)
• Inspect (Authorization, sale deeds, supplier invoice, legal documents)
• Physically verify
• Check date of Capitalization
• Test calculation of depreciation (assess reasonableness of life)

Question 2

Disposal (4)

Answer 2

• Obtain list and agree (Fixed asset schedule)
• Inspect (Authorization, sale deel, invoice)
• Check removal from books
• Recalculate Gain/Loss on disposal

Question 3

Closing balance (6)

Assertions

Answer 3

• Completeness (Agree, record, physical verification)
• Existence
• Valuation and allocation
• Rights and obligations (Land, Vehicles, others)
• Classification
• Presentation

Question 4

Depreciation (6)

Answer 4

• Review fixed asset’s register
• Recalculate Depreciation
• Compare rate of depreciation
• Check reasonableness of estimates
• Review Gain/Loss on disposal
• Check physical condition

Question 5

Revalued (5)

Answer 5

1 Agree with valuation report

2 Ensure valuation:
- for entire class
- up to date
- method is consistent

3 Check disclosures
4 Recalculate surplus
5 Physically inspect condition

Question 6

Self-constructed asset (7)

Answer 6

1 Inspect permission of authorities

2 Select sample of cost and inspect:
- supplier invoice
- payroll records
- bill

3 Discuss capitalization policy and review list of capital expenditure

4 Compare budget with actual cost

5 Expert’s asessment for SOC

6 Check depreciation starts on completion

7 Presentation