The Following Are Two Unrelated Situations

question 24

Essay

The following are two unrelated situations.For each situation,outline possible deviations (if any)from an unmodified auditor's report that may be necessary and give reasons.State your assumptions.A)During 2018,your client was sued by a customer who had a serious car accident as a result of scrap metal that had been dumped in the parking lot.The customer drove over the scrap metal,which became embedded in the tires of her vehicle.The tires blew and the car went out of control on a major highway.The amount in dispute is $400 000,with estimated legal bills of about $20 000.The client does not wish to disclose the suit in the financial statements.B)During the current year,your client leased a large amount of equipment.As the lease qualifies as a capital lease,the equipment has been recorded as an asset,with the corresponding liabilities recorded on the financial statements.The implicit interest rate in the lease is 7 percent.The annual payments due over the terms of the lease have been disclosed in the notes to the financial statements.

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Definitions:

Native Americans

Indigenous peoples of the United States, including both the mainland and Alaska, with distinct cultures, languages, and histories.

Social Differentiation

The process by which society categorizes individuals into different groups based on characteristics such as economic status, profession, age, or race.

Modernization

Modernization refers to the process of transformation from traditional or pre-industrial societies to modern societies characterized by industrialization, urbanization, and cultural change.

U.S. Census

A nationwide survey conducted every ten years in the United States to count the population and collect demographic information, which influences political representation and federal funding distribution.