If the Auditors Discover That the Carrying Amount of a Client's

question 97

Multiple Choice

If the auditors discover that the carrying amount of a client's investments is overstated because of a loss in value that is other than a temporary decline in market value, they should insist that:

• A)the approximate market value of the investments be shown in parentheses on the face of the balance sheet.
• B)the investments be classified as long term for balance-sheet purposes with full disclosure in the footnotes.
• C)the loss in value be recognized in the financial statements.
• D)the equity section of the balance sheet separately show a charge equal to the amount of the loss.

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