Question 3a i
Faster Jets Co is an airline company and is a new audit client of Brown & Co. You are responsible for the audit of the financial statements for the year ended 30 November 2014. The draft financial statements recognise revenue of $150 million and total assets of $250 million.
(a) During the year, Faster Jets Co purchased several large plots of land located near major airports at a cost of $12·5 million. The land is currently rented out and is classified as investment property, which is recognised in the draft financial statements at a fair value of $14·5 million. The audit partner has suggested the use of an auditor’s expert to obtain evidence in respect of the fair value of the land.
Required:
In respect of the land recognised as investment property:
(i) Explain the additional information which you require to plan the audit of the land; and
Note: The total marks will be split equally between each part. (10 marks)