Long-Term Liabilities Flashcards
1
Q
What is the assertion that is the primary concern on LT Liabilities?
A
COMPLETENESS
2
Q
How do you address any decreases (debits) to LT Debts?
A
Trace cash disbursement to bank statement and examine cancelled notes if fully paid
3
Q
How do you address any increases to LT Debts?
A
Read new loan agreement
Trace cash receipts to bank statement
Review BOD minutes
4
Q
How do you address existence of LT Liabilities?
A
Inspect supporting documentation, such as loan agreements
5
Q
How do you address rights and obligations?
A
Read debt agreement
Disclose restrictive debt covenants
May need to reclassify any portion scheduled payment
6
Q
How do you address valuation?
A
Read underlying agreement
Recalculate any discount or premium
Apply analytical procedures to test interest expense reasonableness
