When testing fixed assets for the reasonableness of the client's estimated useful lives,the audit team should do which of the following?
A)consult the IRS code for regulated lives.
B)make the decision for the client upon purchase.
C)understand the economics of the client's business.
D)compare them with other clients in different industries.

Question

Quizplus · Accepted Answer

The audit team should understand the economics of the client's business when testing fixed assets for the reasonableness of the client's estimated useful lives. This is because the useful life of an asset depends on various factors that are specific to the client's business and may differ from those of other clients in different industries. Consulting the IRS code for regulated lives may not be applicable in all cases, and making the decision for the client upon purchase is not the auditor's responsibility. Comparing them with other clients in different industries may not provide useful information. Therefore, understanding the economics of the client's business is the best approach.

When Testing Fixed Assets for the Reasonableness of the Client's