Exam 14: Audit of Longer-Term Liabilities, equity, acquisitions, and Related-Entity Transactions, long-Term Liabilities, and Equity

Impairment of goodwill may be signaled by the significant impairment of a group of property,plant and equipment.

An auditor must understand the business processes of the client to adequately test management's decisions surrounding the impairment of goodwill.

The auditor must determine that all dividends were properly authorized by the board of directors.

An example of a liability that requires significant judgments about certain events is the pension obligation.

All of the following are significant issues for consideration when auditing for the impairment of goodwill,except for which of the following?

Which represents the most significant risk associated with restructuring liabilities on the financial statements?

Accounting combinations must be performed as a pooling of interest transaction and treated as mergers.

Which of the following does not identify a reporting unit for purposes of impairment testing?

There is strong evidence that companies have used pension obligations as a means of smoothing earnings by changing the assumed long-term discount rate or the earnings rate,so this is an important and judgmental area in which the auditor must be careful to exercise appropriate professional skepticism.

It is important that the audit team tests the relationship of a client with other entities in order to determine whether a variable interest entity exists that must be consolidated.

Jakobe Company acquires an average of two companies per year in its efforts to integrate and expand.Which of the following statements best represents Jakobe's treatment of multiple goodwill in the assessment of impairment?

Which one of the following disclosures is not required for stockholder's equity in the financial statements?

In a restructuring,the specific commitment to compensate named individuals for severance results in the recognition of expenses and corresponding liabilities.

Audit of long-term obligations What considerations will the auditor make in auditing a client's long-term obligations?

A comprehensive audit program for stockholders' equity includes a step requiring the examination of all minutes,bylaws,and articles of incorporation.

Costs associated with the restructuring of operations are recorded

Auditors should ensure that clients place a "more than adequate" liability on the books for restructuring charges that are created as a result of acquisitions to be conservative.

Professional skepticism means the auditor should always act professional and not be skeptical when assessing statements made by management.

A company is required to systematically release over-estimated restructuring liabilities into earnings each period to adequately match revenues with expenses.

The evidence that an auditor will most likely review to assess the recording of restructuring charges includes which of the following?