Your client has introduced a significant upgrade of its products and has asked you to perform an obsolescence review of a parts inventory.
You select a monetary unit sample.
The sample disclosed items for which write-downs to lower of cost or market is appropriate.
The estimated write-down is $320,000. The 90% two-sided confidence interval is:
lower confidence limit [LCL], $30,000;
upper confidence limit [UCL], $610,000.
The maximum tolerable misstatement is $400,000 and the planned confidence level is 95% (2-sided).
Present the results graphically, with numbers.
Describe those results in words [i.e., verbally].
Present another graph giving the permissible range for an adjusting journal entry [AJE], with numbers.
Give an acceptable AJE [DR and CR] in good accounting form.
Your client has introduced a significant upgrade of its products and has asked you to perform an obsolescence review of a parts inventory.
You select a monetary unit sample.
The sample disclosed items for which write-downs to lower of cost or market is appropriate.
The estimated write-down is $320,000. The 90% two-sided confidence interval is:
lower confidence limit [LCL], $30,000;
upper confidence limit [UCL], $610,000.
The maximum tolerable misstatement is $400,000 and the planned confidence level is 95% (2-sided).
Present the results graphically, with numbers.
Describe those results in words [i.e., verbally].
Present another graph giving the permissible range for an adjusting journal entry [AJE], with numbers.
Give an acceptable AJE [DR and CR] in good accounting form.
