CAF-8 · Chapter 8 · Question 8 of 10
To verify the 'Classification' of a leased asset, the auditor must determine if it is a right-of-use asset under IFRS 16. What document must be inspected?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The lease agreement and the terms of the contract.
Explanation
The lease agreement contains the essential terms (duration, payments, transfer of control) required to determine the correct accounting treatment and classification of the asset.
More Substantive Procedures: Non-Current Assets MCQs
- Q10An auditor selects 20 assets from the Fixed Asset Register and physically inspects them, but 2 assets cannot be located. What is the most…
- Q1An auditor is verifying the ownership of a client's fleet of commercial vehicles. Which of the following is the most appropriate source of…
- Q2To test the 'Existence' assertion for a new, expensive piece of manufacturing machinery, which procedure is most effective?
- Q3Which of the following is NOT a substantive procedure for verifying the valuation of property, plant, and equipment (PPE)?
- Q4An auditor discovers that a client has capitalized the entire cost of a major factory roof repair as a non-current asset. The repair only…