A Client Has Capitalizable Leases but Refuses to Capitalize Them

question 119

Multiple Choice

A client has capitalizable leases but refuses to capitalize them in the financial statements. Which of the following reporting options does an auditor have if the misstatements have a material and pervasive effect on the financial statements?

• A)Qualified opinion.
• B)Unqualified opinion.
• C)Disclaimer of opinion.
• D)Adverse opinion.

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Definitions:

Bond Trustee

A third party in a bond agreement who ensures that the issuer meets all terms and conditions for the benefit of bondholders.

Redemption Payments

Payments made to buy back or retire a financial instrument, such as bonds, from investors before its maturity date.

Callable Bond

A type of bond that gives the issuer the right to repay the bond before its maturity date, typically at a predefined call price.

Deferred Call Period

A time frame during which a company cannot redeem a callable security, usually a bond, prior to a specified date.