Connect Accounting Chapter 9 Homework Help

Unformatted text preview: 50,000 (b) Cash. ........................................................................... 37,000 Accumulated DepreciationEquipment. ................ 24,000 Equipment. .......................................................... 50,000 Gain on Disposal of Plant Assets. .................... 11,000 (c) Accumulated DepreciationEquipment. ................ 24,000 Cash. ........................................................................... 20,000 Loss on Disposal of Plant Assets. ........................... 6,000 Equipment. .......................................................... 50,000 *EXERCISE 9-19 (a) Declining-balance method: 2014 depreciation = $90,000 X 25%* X 3/12 = $5,625 Book value January 1, 2015 = $90,000 $5,625 = $84,375 2015 depreciation = $84,375 X 25% = $21,093.75 . *(1/8) X 2 = 25% (b) Units-of-activity method: 2014 depreciation = 3,900 hours X $1.17 = $4,563 ....
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Chapter 9 Homework 19,47,49 19.) In performing a substantive test of the book value of a population, auditors must be concerned with two aspects of sampling risk. What are these two aspects of sampling risk, and which aspect is of greater importance to auditors? Explain. 1.) The risk of incorrect rejection (alpha risk) of an account. This is the possibility that sample results will indicate that an account balance is materially misstated when, in fact, it is not misstated. a. If the auditors make this error and incorrectly reject an account balance, their audit will lack efficiency since they will perform additional audit procedures that will eventually reveal that the account is not materially misstated. Thus, the risk of incorrect rejection ordinarily does not relate to the effectiveness of the audit. 2.) The risk of incorrect acceptance (beta risk) of an account. This is the possibility that sample results will indicate that an account balance is not materially misstated when, in fact, it is materially misstated.

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