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Unformatted text preview: Multiple Choice Questions: 13-23. e. 13-24. c. 13-25. c. 13-26. d. 13-27. c. 13-28. b. 13-29. a. 13-30. c. 13-35. WorldCom Telecommunications and Line Capacity Broad Assertion Detailed Assertions for the Audit of this Account Audit Evidence to be Gathered Existence All of the recorded assets exist. Review of purchase documents take a statistical sample of additions to fixed assets and review underlying supporting documentation. Observe the new additions to fixed assets. Rights and Obligations The company has the rights to use all the assets that have been added during the year for the use intended. Review purchase contracts. Inquire of leaseholders, if any. Review swap contracts for line use to determine if there are any special restrictions. Valuation and Allocation All of the fixed assets have been recorded correctly at cost. Depreciation has been computed based on economic life and estimated use of the assets. Take a MUS sample of major additions during the year. Review all selected transactions to determine if correctly recorded. Examine the useful life suggested for the assets to determine reasonableness. Compare useful life with other companies in the industry. Recompute depreciation on both the new assets as well as existing assets (because the company has been labeled a high risk audit). Broad Assertion Detailed Assertions for the Audit of this Account Audit Evidence to be Gathered Foot the additions and review the entries to the fixed asset additions to determine that amounts are recorded correctly. Presentation and Disclosure There is proper disclosure of depreciation methods used. Review the company notes to determine that disclosures are consistent with methods used....
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- Spring '11