Your client, Schroeder Manufacturing Co., provided the following schedule of property, plant, and equipment for the year ended June 30, 2019. Balances have been agreed to the general ledger. As part of the audit, the in-charge has asked you to perform
procedures related to testing additions to the accounts using data provided by the client.
Account Description
6/30/2018
Beginning
Balance Additions Disposals
6/30/2019
Ending
Balance
Land $ 8,349,748 — — $ 8,349,748
Building 45,093,983 $ 11,250,450 — 56,344,433
Building/Land improvements 7,340,983 1,487,094 $ 432,121 8,395,956
Furniture fixture and equipment 2,984,783 159,530 36,598 3,107,715
Manufacturing equipment 8,992,436 2,509,418 667,145 10,834,709
Molds and tooling 1,239,867 240,732 44,987 1,435,612
Vehicles and computer equipment 1,034,784 408,971 125,554 1,318,201
Repairs and maint–Building 302,784 — — 302,784
Repairs and maint–Equipment 192,783 71,196 — 263,979
$75,532,151 $16,127,391 $1,306,405 $90,353,137
Download the PPEADDITIONS file (www.pearsonhighered.com/arens.com) from the
textbook website and perform the following audit procedures using Excel, ACL, or IDEA.
Document the steps followed for each procedure. A description of the codes and information contained in each column in the spreadsheet is included on the first tab.
a. Foot the file of additions to property, plant, and equipment for the year ended June
30, 2019, by asset code (ASSETCD) and agree to additions according to the schedule
provided above. What audit objective(s) is (are) satisfied with this audit procedure?
b. Select all additions to the account greater than $25,000 for follow-up testing. How
many items are identified and what is the total of the additions greater than $25,000?
What further testing will the auditor perform for these acquisitions?
c. Identify all additions to property, plant, and equipment that were a result of significant repairs and maintenance for follow-up testing. How many items are identified? What further audit procedures will the auditor perform for these items?
d. Add an additional column to the spreadsheet and recalculate depreciation expense
for each item. Schroeder uses straight-line depreciation, with a half-year convention
and assumes zero salvage value. Document the results of the procedure and recom-
mend follow-up if necessary.
e. Verify the sequence of asset tag numbers used and identify any duplicates or gaps.
What audit objective(s) is (are) satisfied by this procedure? Document the results of
the procedure and recommend follow-up if necessary.
