by the Soviet

Union.

A.beneficial

B.artificial

C.commercial

D.financial

ched by the Soviet Union.

A) initiated

B) originated

C) embarked

D) commenced

ility company. Volcan operates

a national supermarket chain of 23 stores, five of which are in the capital city, Urvina. All the stores are managed in

the same way with purchases being made through Volcan’s central buying department and product pricing, marketing,

advertising and human resources policies being decided centrally. The draft financial statements for the year ended

31 March 2005 show revenue of $303 million (2004 – $282 million), profit before taxation of $9·5 million (2004

– $7·3 million) and total assets of $178 million (2004 – $173 million).

The following issues arising during the final audit have been noted on a schedule of points for your attention:

(a) On 1 May 2005, Volcan announced its intention to downsize one of the stores in Urvina from a supermarket to

a ‘City Metro’ in response to a significant decline in the demand for supermarket-style. shopping in the capital.

The store will be closed throughout June, re-opening on 1 July 2005. Goodwill of $5·5 million was recognised

three years ago when this store, together with two others, was bought from a national competitor. It is Volcan’s

policy to write off goodwill over five years. (7 marks)

Required:

For each of the above issues:

(i) comment on the matters that you should consider; and

(ii) state the audit evidence that you should expect to find,

in undertaking your review of the audit working papers and financial statements of Volcan for the year ended

31 March 2005.

NOTE: The mark allocation is shown against each of the three issues.

(b) On 1 April 2004 Volcan introduced a ‘reward scheme’ for its customers. The main elements of the reward

scheme include the awarding of a ‘store point’ to customers’ loyalty cards for every $1 spent, with extra points

being given for the purchase of each week’s special offers. Customers who hold a loyalty card can convert their

points into cash discounts against future purchases on the basis of $1 per 100 points. (6 marks)

Required:

For each of the above issues:

(i) comment on the matters that you should consider; and

(ii) state the audit evidence that you should expect to find,

in undertaking your review of the audit working papers and financial statements of Volcan for the year ended

31 March 2005.

NOTE: The mark allocation is shown against each of the three issues.

A、True

B、False

C、It is impossible to tell from the data.

D、0

October 2003 for the year to 30 September 2004 was $1600. Rent expense, as shown in the statement of profit or loss for the year ended 31 December 2003, would be:

A、$1200

B、$1600

C、$1300

D、$1500

es. The plan provides a

pension of 1% of the final salary for each year of service. The cost for the year is determined using the projected unit

credit method. This reflects service rendered to the dates of valuation of the plan and incorporates actuarial

assumptions primarily regarding discount rates, which are based on the market yields of high quality corporate bonds.

The expected average remaining working lives of employees is twelve years.

The directors have provided the following information about the defined benefit plan for the current year (year ended

31 October 2005):

(i) the actuarial cost of providing benefits in respect of employees’ service for the year to 31 October 2005 was

$40 million. This is the present value of the pension benefits earned by the employees in the year.

(ii) The pension benefits paid to former employees in the year were $42 million.

(iii) Savage should have paid contributions to the fund of $28 million. Because of cash flow problems $8 million of

this amount had not been paid at the financial year end of 31 October 2005.

(iv) The present value of the obligation to provide benefits to current and former employees was $3,000 million at

31 October 2004 and $3,375 million at 31 October 2005.

(v) The fair value of the plan assets was $2,900 million at 31 October 2004 and $3,170 million (including the

contributions owed by Savage) at 31 October 2005. The actuarial gains recognised at 31 October 2004 were

$336 million.

With effect from 1 November 2004, the company had amended the plan so that the employees were now provided

with an increased pension entitlement. The benefits became vested immediately and the actuaries computed that the

present value of the cost of these benefits at 1 November 2004 was $125 million. The discount rates and expected

the period from 1 October

2003 to 31 March 2005.

What figures should appear in the company’s financial statements for the year ended 31 December 2004？

He picked a textbook from the bookshelf and then commenced to read.

A．directed

B．commented

C．committed

D．began

He picked a book from the bookshelf and then commenced to read.

A.directeD

B.commenteD

C.committeD

D.began