I am an accountant, who has asked by Denise Cook to provide her with advise. The Cook family had received their financial statements and they were concerned about some aspects of the statements. The Cook family believes that Mr. Ngo isn’t acting in good faith and is trying to cheat the Cook family of money that is rightfully owed to them. It is my job to provide a detailed report that analyzes aspects of the financial statements.
My objective is to analyze the financial statements and report on anything that is suspicious. Denise Cook’s objective is not to be cheated by Ngo, financially. The constraints I have is following ASPE.
During 2016 management began planning in offer their products online. They invested in developing a new e-business website. …show more content…
Fair value < Carrying value
If both conditions aren’t met a write-down isn’t required. If the value-in-use is greater than the carrying amount no write down is needed. In this case the net book value is greater than the recoverable amount, meaning, there should be a write out.
The inventory being held at a third party location must be counted under ASPE. Under ASA 501 inventory under custody and control are require to be reported to the financial report. The auditor needs proof that the inventory exists so a confirmation from the third party confirming that they are holding the inventory is required. With counting the inventory, the assets on the financial statement will be lower than it actually is, thus less equity.
In conclusion, Ngo is trying to cheat some of the money from the Cooks. The $470,000 in development cost are not an expense, they are an asset. Thus, increasing the value of the company. The revenue should have been recognized at the day it was completed and not the day of delivery. The old equipment should be written off under ASPE. The inventory at the third party location must be recorded since the inventory belongs to the Cooks. Without recording the inventory, the assets will be
My objective is to analyze the financial statements and report on anything that is suspicious. Denise Cook’s objective is not to be cheated by Ngo, financially. The constraints I have is following ASPE.
During 2016 management began planning in offer their products online. They invested in developing a new e-business website. …show more content…
Fair value < Carrying value
If both conditions aren’t met a write-down isn’t required. If the value-in-use is greater than the carrying amount no write down is needed. In this case the net book value is greater than the recoverable amount, meaning, there should be a write out.
The inventory being held at a third party location must be counted under ASPE. Under ASA 501 inventory under custody and control are require to be reported to the financial report. The auditor needs proof that the inventory exists so a confirmation from the third party confirming that they are holding the inventory is required. With counting the inventory, the assets on the financial statement will be lower than it actually is, thus less equity.
In conclusion, Ngo is trying to cheat some of the money from the Cooks. The $470,000 in development cost are not an expense, they are an asset. Thus, increasing the value of the company. The revenue should have been recognized at the day it was completed and not the day of delivery. The old equipment should be written off under ASPE. The inventory at the third party location must be recorded since the inventory belongs to the Cooks. Without recording the inventory, the assets will be