Assets acquired under hire purchase system

Auditing and Assurance Revision Questions and Answers

 Verify the hire purchase agreement and note down the relevant points.
 Understand the accounting method followed the entity under audit with regard to asset under hire purchase system.
 Ascertain that only the capital portion of the installment has been debited to the asset account and that the interest included in each installment as well, if any, has been charged off to revenue.
 Ensure that adequate depreciation has been provided on the full cash purchase price of the asset.

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