14租赁审计考得太细了

IFRS16Leases

2018/9Q2ai(y.e.31/5/2018)

IFRS16Leases

2018/9Q2ai(y.e.31/5/2018)

InthejurisdictioninwhichClarkCooperates,allmotorvehiclesoverthreeyearsoldarerequiredtoundergoanannualtestofvehiclesafetyandroadworthiness.Theannualtestrequiresspecialisttestingequipmentwhichisinspectedbygovernmentofficialsonaregularbasis.FollowinginspectionvisitsinMay20X8,thegovernmentinspectionreportrequiredClarkCotoreplacethetestingequipmentatthreeofitssites.Inordertocomplywiththisrequirement,ClarkCohasagreedtoleasenewtestingequipmentfromaleasingcompanyonsix-monthleases.Underthetermsoftheleases,thecompanyhasnooptiontopurchasetheequipment.Thetestingequipmentwas

madeavailableforusebyClarkCoateachofthethreesiteson31May20X8.

IFRS16Leases

2018/9Q2ai(y.e.31/5/2018)

Theclienthascapitalisedleaseswithatotalcarryingamountof$625,000attwoofthesitesbuthaselectedtotakeadvantageoftheIFRS16Leasesexemptionnottocapitaliseshort-termleasesatthelargestofthethreesites.Asaresult,thepresentvalueoftheleasepaymentsof$475,000relatingtothissitehasnotbeenrecognisedonthecompany’sstatementoffinancialposition.

Required:Recommendandexplainthematterswhichshouldbediscussedwithmanagementinrelationtoeachoftheproposedadjustments,includinganassessmentoftheirindividualimpactonthefinancialstatementsandontheauditor’sopinionifmanagementdoesnotmaketheproposedadjustments.(7marks)

IFRS16Leases

Matterstoconsider

Thelargestsite475/22,000=2.3%ofTA,materialTheothertwosites625/22,000=2.8%ofTA,material

IFRS16requireslesseetorecogniserightofuseassetandleaseliabilityatcommencementdate,atPVofleasepayment.Andcommencementdateisthedatewhentheassetisavailableforusebythelease,whichis31/5/2018.

IFRSalsocontainsexemptionforshorttermleasesoflessthan12monthandlowvalueleases.IfClarkcompanyelecttoapplythisexemption,itdoesnotrecognisetheuseofassetandliabilitybutrecogniseexpensesonstraightlinebasis.Ifthisexemptionistaken,itmustbeappliedconsistentlybyeachclassoftheasset.

Hence,Clarkcompanymusteithercapitalisetheleaseacrossallthesitesorapplyexemptionacrossanyofthesites.

IFRS16Leases

ImpactonFS

IfClarkcompanyelecttotakeexemption,assetandliabilityaremateriallyoverstatedby625K.

IfClarkcompanyelectnottotakeexemption,asset&liabilityaremateriallyunderstatedby475K,asproposedbyauditor.

September/December2019Q2ai

September/December2019Q2

Required:Commentonthematterstobeconsideredandexplaintheauditevidenceyouwouldexpecttofindduringyourreviewoftheauditworkingpapersinrespectoftheissuesdescribedabove.(20marks)

考得太细了！！

September/December2019Q2ai

Itis1July20X5.YouareamanagerintheauditdepartmentofPeart&Co,afirmofCharteredCertifiedAccountants,responsiblefortheauditofLifesonCofortheyearended31March20X5.LifesonCoisanunlistedretailcompanywhichisanewauditclientofyourfirmthisyear.Thecompany’sdraftfinancialstatementsrecogniseprofitbeforetaxof$2·15million(20X4–

$1·95million)andtotalassetsof$13·8million(20X4–$12·7million).Theauditisnearlycompleteandyouarereviewingtheauditworkingpapers.Theauditsupervisorhasbroughtthefollowingmatterstoyourattention:

September/December2019Q2ai

(i)Saleandleasebacktransaction

On31March20X5,LifesonCosoldapropertytoaleasingcompany,CliveCo,foritsfairvalueatthisdate.Thepropertyissituatedinasoughtafterareawithahighdemandforrentalpropertiesforretailpurposes.CliveCohasassessedtheremaininglifeofthepropertytobeinexcessof50years,andunderthetermsofthesalesagreement,LifesonCowillleasethepropertybackfromCliveCoforaperiodoftenyears.LifesonCohastreatedthetransactionasasaleandleasebacktransactioninaccordancewithIFRS®16Leases,andderecognisedthepropertyinitsfinancialstatementsandrecordedasaleinaccordancewithIFRS15RevenuefromContractswithCustomers.

(8marks)

September/December2019Q2ai

Matterstoconsider

AsperIFRS15,Controlofanassetisdefinedastheabilitytodirecttheuseofandobtainsubstantiallyalloftheremainingbenefitsfromtheasset.

Inthiscase,theleasetermof10yearsappearsshortcomparedtotheremaininglifewhichisexpectedtoexceed50years,andgiventhedemandforretailpropertiesforrentinthearea,itseemslikelythatCliveCowilldirecttheuseofandobtainsubstantiallyalloftheremainingbenefitsfromtheassetincludingthepotentialcashflowsinthefuture.

Assuch,thederecognitionofthepropertyinLifesonFSandtherecordingasasaleappearstobecorrect.

September/December2019Q2ai

Matterstoconsider

Inaddition,clientshouldrecognisearight-of-useassetbasedontheproportionofthepreviouscarryingamountoftheasseteffectivelyretainedandrecogniseafinancialliabilitybasedonthepresentvalueoftheleasepayments,anygainorlossarisingonthetransactionshouldberecognisedinprofitorloss.

RMM=Noright-of-useassetandleaseliabilityisrecoginisedImpact=Understateasset,understateliability

September/December2019Q2ai

Evidence

Receivesaleandleasebackagreement,toconfirmdetailsincludingtherightsofthelesseeandlessortocontroltheasset,saleproceeds,rentalamountsandtimings,theleasetermandtheinterestrateimplicitinthelease.,etc.

Reviewreportsontheproperty,toconfirmtheexpectedremaininglifeofthepropertyexceeds50years.

Observelocalpropertymarkettransactions,includingtradejournals,pressarticles,officialstatistics,toconfirmhighdemandforretailleases.

2&3佐证控制权转移，以支持上述会计处理

Discusswithmanagementabouttransferofcontrolandcorrecttreatmentof

saleandleasebackarrangement.

September/December2019Q2ai

Evidence

AgreecarryingamountofthepropertytoN