Management of Hill Company Has Decided Not to Account for a Material

question 847

Multiple Choice

Management of Hill Company has decided not to account for a material transaction in accordance with the provisions of an FASB Standard. In setting forth its reasons in a note to the financial statements, management has clearly demonstrated that due to unusual circumstances the financial statements presented in accordance with the FASB Standard would be misleading. The auditor's report should include a separate explanatory paragraph and contain a(an) :

• A) "Except for" qualified opinion.
• B) "Subject to" qualified opinion.
• C) Adverse opinion.
• D) Unqualified opinion.

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Definitions:

Straight-Line Method

The straight-line method is a way of calculating the depreciation of an asset, which spreads the cost of the asset evenly over its expected useful life.

Equipment

includes tangible property that is used in operations, often for more than one year, such as machinery, computers, and vehicles.

Depreciation

The methodical distribution of an asset's depreciable value across its lifespan.

Depreciable Cost

The cost of a tangible asset minus its estimated salvage value, over which depreciation is calculated.