Question

a. coverage related to the hazard. Although the likelihood is remote, a material portion Unmodified-standard report of the company's assets could be destroyed by a serious accident. Draves Company owns substantial properties that have appreciated significantly in value since the date of purchase. The properties were appraised and are reported b. in the balance sheet at the appraised values (which materially exceed costs) with Either qualified or adverse related disclosures. The CPAs believe that the appraised values reported in the balance sheet reasonably estimate the assets' current values During the audit of Eagle Company, the CPA firm has encountered a significant c. scope limitation relating to inventory record availability and is unable to obtain Either qualified or disclaimer sufficient appropriate audit evidence in that area London Company has Stocks of the subsidiary companies are not actively traded in the market, and the CPA firm's engagement does not extend to any subsidiary company. The CPA firm is able to determine that all investments are carried at original cost but has no real idea of market value. Although the difference between cost and market could be material, it could not have a pervasive effect on the overall financial statements. material investments in stocks of subsidiary companies Either qualified or disclaimer Slade Company has material investments in stocks of subsidiary companies Stocks of the subsidiary companies are actively traded in the market. Management insists that all investments be carried at original costs, and the CPA firm is satisfied that the original costs are accurate. The CPA firm believes that the client will never ultimately realize a substantial portion of the investments because the market value is much lower than the cost; the client has fully disclosed the facts in notes to the financial statements Either qualified or adverse e·

Answer 1

d) Qualified

Reason:

The difference between cost and market could be Material but it could not have pervasive effect on the overall financial statement.

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