The Property Portfolio of Utopia Pty Ltd Is Stated at a Value

question 26

Multiple Choice

The property portfolio of Utopia Pty Ltd is stated at a value of $1 million in excess of its current market value. Utopia Pty Ltd is a non-reporting entity and does not apply the provisions of AASB 1010 in the preparation of its financial
Report. The directors believe that it would be inappropriate to write the properties down to market value as it is their
Intention to hold the properties as a long-term investment and the properties will eventually recover their value. The
Independent valuer agrees that the property will eventually recover its full value. Sufficient appropriate audit evidence
To support the value of the property would include obtaining a letter of representation from management confirming:

• A) the directors' intention to hold the property on a long-term basis, that the value of the buildings is likely to increase in the long term and that the company is indeed a non-reporting entity.
• B) the directors' intention to hold the property on a long-term basis and that the company is indeed a non-reporting entity.
• C) the intention to hold the property on a long-term basis.
• D) the company is indeed a non-reporting entity.

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Definitions:

Elasticity

A measure of the responsiveness of quantity demanded or supplied to a change in one of its determinants, such as price or income.

Consumer Expenditure

The total amount spent by consumers on goods and services within a specific period.

Demand Curves

illustrate the relationship between the price of a good and the quantity demanded, typically showing a downward slope indicating that demand decreases as price increases.

Price Decrease

A reduction in the cost at which a good or service is sold, often aimed at increasing demand or sales volume.