The audit senior has asked you to perform analytical procedures to obtain

LO 8 The audit senior has asked you to perform analytical procedures to obtain substantive evidence on the reasonableness of recorded depreciation expense of the delivery vehicles of a client. Changes in the account occurred pretty much evenly during the year. The estimated useful life is six years. Estimated salvage value is 10% of original cost. Straight-line depreciation is   used. Additional information: Delivery Equipment (per General Ledger) View complete question » Beginning balance $380,500 Additions 154,000 12-52      LO 8 The audit senior has asked you to perform analytical proce- dures to obtain substantive evidence on the reasonableness of recorded depreciation expense of the delivery vehicles of a client. Changes in the account occurred pretty much evenly during the year. The estimated useful life is six years. Estimated salvage value is 10% of original cost. Straight-line depreciation is   used. Additional information: Delivery Equipment (per General Ledger) Beginning balance $380,500 Additions 154,000 Disposals (95,600) Ending balance $438,900 Current year depreciation  expense per books ¼  $60,500 Based on this information, estimate the amount of depreciation expense for the year using analytical procedures. Does the recorded depreciation expense seem acceptable? Explain. What is the impact of the result of this analytical procedure on other substantive pro- cedures that the auditor may perform?


 

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