What type of auditor report would be issued in each of the following cases? Justify your choice. Bowles Company is engaged in a hazardous trade and cannot obtain insurance coverage from any source. A material portion of the company’s assets could be destroyed by a serious accident. Drave Company owns substantial properties that have appreciated significantly in value since the date purchase. The properties were appraised and are reported in the balance sheet at the appraised values with full disclosure. The CIAs believe that the appraised values reported in the balance sheet reasonably estimate the assets current values. The CIA firm is auditing the financial statement that are to be included in the annual report to the stockholder of Eagle Company, A regulated company Eagle’s Financial Statement are prepared as prescribed by a regulatory agency of the Pakistan Government and some items are not presented in accordance with generally accepted accounting principles. The amounts involved are somewhat material and are adequately disclosed in notes to the financial statement. London Company has material investment in stocks of subsidiary companies. Stock of the subsidiary companies is not actively traded in the market. And the CIA firm’s engagement does not extend to any subsidiary company. The ICA firm is able to determine that all investment are carried at original cost, and the auditors have no reason to suspect that the amounts are not stated fairly. Slade Company has material investment in stocks of subsidiary companies. Stocks of the subsidiary companies are actively traded in the market, but the CIA firm’s engagement does not extend to any subsidiary company. Management insists that all investment shall be carried at original costs, and the CIA firm is satisfied that the original costs are accurate. The CIA firm believes that the client will never ultimately realize a substantial portion of the investments, and the client has fully disclosed the facts in notes to the financial statements.

What type of auditor report would be issued in each of the following cases? Justify your choice. Bowles Company is engaged in a hazardous trade and cannot obtain insurance coverage from any source. A material portion of the company’s assets could be destroyed by a serious accident. Drave Company owns substantial properties that have appreciated significantly in value since the date purchase. The properties were appraised and are reported in the balance sheet at the appraised values with full disclosure. The CIAs believe that the appraised values reported in the balance sheet reasonably estimate the assets current values. The CIA firm is auditing the financial statement that are to be included in the annual report to the stockholder of Eagle Company, A regulated company Eagle’s Financial Statement are prepared as prescribed by a regulatory agency of the Pakistan Government and some items are not presented in accordance with generally accepted accounting principles. The amounts involved are somewhat material and are adequately disclosed in notes to the financial statement. London Company has material investment in stocks of subsidiary companies. Stock of the subsidiary companies is not actively traded in the market. And the CIA firm’s engagement does not extend to any subsidiary company. The ICA firm is able to determine that all investment are carried at original cost, and the auditors have no reason to suspect that the amounts are not stated fairly. Slade Company has material investment in stocks of subsidiary companies. Stocks of the subsidiary companies are actively traded in the market, but the CIA firm’s engagement does not extend to any subsidiary company. Management insists that all investment shall be carried at original costs, and the CIA firm is satisfied that the original costs are accurate. The CIA firm believes that the client will never ultimately realize a substantial portion of the investments, and the client has fully disclosed the facts in notes to the financial statements.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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What type of auditor report would be issued in each of the following cases? Justify your choice.

Bowles Company is engaged in a hazardous trade and cannot obtain insurance coverage from any source. A material portion of the company’s assets could be destroyed by a serious accident.

Drave Company owns substantial properties that have appreciated significantly in value since the date purchase. The properties were appraised and are reported in the balance sheet at the appraised values with full disclosure. The CIAs believe that the appraised values reported in the balance sheet reasonably estimate the assets current values.

The CIA firm is auditing the financial statement that are to be included in the annual report to the stockholder of Eagle Company, A regulated company Eagle’s Financial Statement are prepared as prescribed by a regulatory agency of the Pakistan Government and some items are not presented in accordance with generally accepted accounting principles. The amounts involved are somewhat material and are adequately disclosed in notes to the financial statement.

London Company has material investment in stocks of subsidiary companies. Stock of the subsidiary companies is not actively traded in the market. And the CIA firm’s engagement does not extend to any subsidiary company. The ICA firm is able to determine that all investment are carried at original cost, and the auditors have no reason to suspect that the amounts are not stated fairly.

Slade Company has material investment in stocks of subsidiary companies. Stocks of the subsidiary companies are actively traded in the market, but the CIA firm’s engagement does not extend to any subsidiary company. Management insists that all investment shall be carried at original costs, and the CIA firm is satisfied that the original costs are accurate. The CIA firm believes that the client will never ultimately realize a substantial portion of the investments, and the client has fully disclosed the facts in notes to the financial statements.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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