The Statement About Inherent Risk Assessments for Property, Plant and Equipment

question 27

Multiple Choice

The statement about inherent risk assessments for property, plant and equipment that is inaccurate is:

• A) Inherent risk is normally low for the presentation and disclosure assertion for PPE assets acquired under finance leases.
• B) Inherent risk is normally low for the existence assertion in a merchandising entity because PPE assets are not generally vulnerable to theft.
• C) Inherent risk is normally moderate to high for the existence assertion in a manufacturing entity because scrapped or retired PPE assets may not be written off the books.
• D) Inherent risk is normally low for the valuation and allocation assertion when PPE assets are purchased for cash.