Management of Edington Industries Plans to Disclose an Uncertainty as Follows

question 754

Multiple Choice

Management of Edington Industries plans to disclose an uncertainty as follows: The Company is a defendant in a lawsuit alleging infringement of certain patent rights and claiming damages. Discovery proceedings are in progress. The ultimate outcome of the litigation cannot presently be determined. Accordingly, no provision for any liability that may result upon adjudication has been made in the accompanying financial statements. The auditor is satisfied that sufficient audit evidence supports management's assertions about the nature and disclosure of the uncertainty. What type of opinion should the auditor express under these circumstances?

• A) Unqualified without an explanatory paragraph.
• B) "Subject to" qualified.
• C) "Except for" qualified.
• D) Disclaimer of opinion.

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Definitions:

Chisel-Like Edges

Describes tool features or natural objects that possess sharp, cutting edges similar to those of a chisel.

Brain Expansion

Refers to the process of increase in brain size and complexity, often related to evolutionary advancements in various species, particularly humans.

Organized Hunting

The coordinated and planned effort by a group of individuals to pursue and capture or kill wild animals for food, sport, or other purposes.

Homo Erectus

An extinct hominin species that lived from approximately 1.9 million to 140,000 years ago, known for being one of the first to exhibit humanlike walking and use of tools.