Audit
Group Case 4, Billy’s Beats
Billy’s Beats Inc. Completing the Audit Due Date: December 10 by 8PM Please read the instructions below carefully. Failure to follow these instructions may adversely affect your grade for this assignment. As outlined in the syllabus, the penalty for unexcused late assignments is 10% of the maximum points for each day that the assignment is late, and no assignment will be accepted after three days from its due date. • Read the case and the “Required” section of the case assignment below. Complete the four questions in the “Required” section. Refer to the “Further Guidance” section to help you structure your answers. Your group should only submit one case solution through Blackboard. Keep the submission receipt that Blackboard provides for you. The assignment must be submitted by 8pm on Tuesday, December 10th. Include the first and last names of …show more content…
(Billy’s), a public SEC registrant, is a new audit client with a fiscal year-end of December 31, 2012. Billy’s manufactures musical instruments. Billy’s acquired Little Drummer Boy Inc. (Little Drummer) in 2012 for $925 million in cash. Significant assets acquired included property, plant, and equipment totaling $865 million and other assets totaling $145 million. Billy’s also assumed a substantial amount of Little Drummer’s liabilities. The useful lives assigned to the plant, and equipment acquired were 30 years for the plant and 15 years for the equipment. The useful lives for the plant and equipment already owned by Billy’s are 20 years and 10 years, respectively. Acquired customer lists, included in other assets, were assigned a useful life of 15 …show more content…
Identify any accounting issues that should be addressed by the auditor. Cite relevant accounting standards for any issues you identify. Include the relevant references with each issue identified, not at the end of the question. See below for guidance on how to structure your answer. 2. Determine whether the engagement team performed adequate and appropriate audit procedures to determine whether each of the items described in the case was fairly presented. If the engagement team did not perform adequate and appropriate procedures, describe what additional procedures should have been performed. Site relevant auditing standards for any issues you identify. Include the relevant references with each issue identified, not at the end of the question. See below for guidance on how to structure your answer. 3. Assume the combined effects of the changes in useful lives and in the allowance for uncollectables on reported net income are material, and that the auditor disagrees with the changes. Explain the effect on the audit report. 4. Now assume it is a year later and time for the 2013 audit. During 2013, Billy’s has lost many of Rock Out’s clients. What additional accounting and auditing issues would this create for
Group Case 4, Billy’s Beats
Billy’s Beats Inc. Completing the Audit Due Date: December 10 by 8PM Please read the instructions below carefully. Failure to follow these instructions may adversely affect your grade for this assignment. As outlined in the syllabus, the penalty for unexcused late assignments is 10% of the maximum points for each day that the assignment is late, and no assignment will be accepted after three days from its due date. • Read the case and the “Required” section of the case assignment below. Complete the four questions in the “Required” section. Refer to the “Further Guidance” section to help you structure your answers. Your group should only submit one case solution through Blackboard. Keep the submission receipt that Blackboard provides for you. The assignment must be submitted by 8pm on Tuesday, December 10th. Include the first and last names of …show more content…
(Billy’s), a public SEC registrant, is a new audit client with a fiscal year-end of December 31, 2012. Billy’s manufactures musical instruments. Billy’s acquired Little Drummer Boy Inc. (Little Drummer) in 2012 for $925 million in cash. Significant assets acquired included property, plant, and equipment totaling $865 million and other assets totaling $145 million. Billy’s also assumed a substantial amount of Little Drummer’s liabilities. The useful lives assigned to the plant, and equipment acquired were 30 years for the plant and 15 years for the equipment. The useful lives for the plant and equipment already owned by Billy’s are 20 years and 10 years, respectively. Acquired customer lists, included in other assets, were assigned a useful life of 15 …show more content…
Identify any accounting issues that should be addressed by the auditor. Cite relevant accounting standards for any issues you identify. Include the relevant references with each issue identified, not at the end of the question. See below for guidance on how to structure your answer. 2. Determine whether the engagement team performed adequate and appropriate audit procedures to determine whether each of the items described in the case was fairly presented. If the engagement team did not perform adequate and appropriate procedures, describe what additional procedures should have been performed. Site relevant auditing standards for any issues you identify. Include the relevant references with each issue identified, not at the end of the question. See below for guidance on how to structure your answer. 3. Assume the combined effects of the changes in useful lives and in the allowance for uncollectables on reported net income are material, and that the auditor disagrees with the changes. Explain the effect on the audit report. 4. Now assume it is a year later and time for the 2013 audit. During 2013, Billy’s has lost many of Rock Out’s clients. What additional accounting and auditing issues would this create for