Government Grant – NBC Institute

AAA – Nov 2017 – L3 – Q6 – Audit Reporting

Discuss audit report modifications, draft modified report on grant treatment, and analyze auditor’s responsibilities regarding asset valuation.

Question

During the audit of fixed assets for Next Engineering Plc as of December 31, 2016, two issues were encountered:

The cost calculations for direct labor on assets under construction were destroyed, with the direct labor cost totaling ₦20,000,000.
A government grant of ₦50,000,000, received for plant and equipment purchased during the year, was fully credited to the income statement as an exceptional item, though the plant and equipment have a 10-year useful life.

Requirements:
a. Discuss the general forms of modifications available to auditors in drafting their report and specify circumstances for each form.

(6 Marks)
b. Assuming a modified audit report is necessary regarding the government grant treatment, draft the relevant section (entire report not required).

(5 Marks)
c. Analyze the auditor’s general responsibility concerning the directors’ report on land and building valuation.

(4 Marks)

Answer

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Tags: Auditors' responsibilities, Fixed Assets, Government Grant, Land and Building Valuation, Modified Audit Report
Level: Level 3

Topic: Audit Reporting
Series: NOV 2017

FR – May 2018 – L2 – Q2a – Financial Reporting Standards and Their Applications

Explain the two ways that the Directors of Sea Fishing Ltd can account for the grant in line with relevant accounting standards.

Question

On 1 October 2016, the Government of Ghana awarded Sea Fishing Ltd one of six licenses issued to operate a production facility for five years. A subsidised sum of GH¢1 million was paid by Sea Fishing Ltd for the license. The Government of Ghana considers the difference between the nominal value and its fair value, which is GH¢3,000,000, as a grant to Sea Fishing Ltd.

Required:
Explain the TWO ways that the Directors of Sea Fishing Ltd can account for this transaction. (Apply the relevant accounting standards). (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Government Grant, IAS 20, IFRS, Intangible Assets
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAY 2018

AAA – Nov 2017 – L3 – Q6 – Audit Reporting

Discuss audit report modifications, draft modified report on grant treatment, and analyze auditor’s responsibilities regarding asset valuation.

Question

During the audit of fixed assets for Next Engineering Plc as of December 31, 2016, two issues were encountered:

The cost calculations for direct labor on assets under construction were destroyed, with the direct labor cost totaling ₦20,000,000.
A government grant of ₦50,000,000, received for plant and equipment purchased during the year, was fully credited to the income statement as an exceptional item, though the plant and equipment have a 10-year useful life.

Requirements:
a. Discuss the general forms of modifications available to auditors in drafting their report and specify circumstances for each form.

(6 Marks)
b. Assuming a modified audit report is necessary regarding the government grant treatment, draft the relevant section (entire report not required).

(5 Marks)
c. Analyze the auditor’s general responsibility concerning the directors’ report on land and building valuation.

(4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditors' responsibilities, Fixed Assets, Government Grant, Land and Building Valuation, Modified Audit Report
Level: Level 3

Topic: Audit Reporting
Series: NOV 2017

FR – May 2018 – L2 – Q2a – Financial Reporting Standards and Their Applications

Explain the two ways that the Directors of Sea Fishing Ltd can account for the grant in line with relevant accounting standards.

Question

Required:
Explain the TWO ways that the Directors of Sea Fishing Ltd can account for this transaction. (Apply the relevant accounting standards). (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Government Grant, IAS 20, IFRS, Intangible Assets
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAY 2018

Question Tag: Government Grant

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AAA – Nov 2017 – L3 – Q6 – Audit Reporting

Discuss audit report modifications, draft modified report on grant treatment, and analyze auditor’s responsibilities regarding asset valuation.

FR – May 2018 – L2 – Q2a – Financial Reporting Standards and Their Applications

Explain the two ways that the Directors of Sea Fishing Ltd can account for the grant in line with relevant accounting standards.

AAA – Nov 2017 – L3 – Q6 – Audit Reporting

Discuss audit report modifications, draft modified report on grant treatment, and analyze auditor’s responsibilities regarding asset valuation.

FR – May 2018 – L2 – Q2a – Financial Reporting Standards and Their Applications

Explain the two ways that the Directors of Sea Fishing Ltd can account for the grant in line with relevant accounting standards.

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AAA – Nov 2017 – L3 – Q6 – Audit Reporting

Discuss audit report modifications, draft modified report on grant treatment, and analyze auditor’s responsibilities regarding asset valuation.

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FR – May 2018 – L2 – Q2a – Financial Reporting Standards and Their Applications

Explain the two ways that the Directors of Sea Fishing Ltd can account for the grant in line with relevant accounting standards.

You're reporting an error for "FR – May 2018 – L2 – Q2a – Financial Reporting Standards and Their Applications"

AAA – Nov 2017 – L3 – Q6 – Audit Reporting

Discuss audit report modifications, draft modified report on grant treatment, and analyze auditor’s responsibilities regarding asset valuation.

You're reporting an error for "AAA – Nov 2017 – L3 – Q6 – Audit Reporting"

FR – May 2018 – L2 – Q2a – Financial Reporting Standards and Their Applications

Explain the two ways that the Directors of Sea Fishing Ltd can account for the grant in line with relevant accounting standards.

You're reporting an error for "FR – May 2018 – L2 – Q2a – Financial Reporting Standards and Their Applications"

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