To Satisfy the Valuation Assertion When Auditing an Investment in Another

question 116

Multiple Choice

To satisfy the valuation assertion when auditing an investment in another company that is publicly and actively traded,an auditor most likely would seek to

• A) Inspect the stock certificates evidencing the investment.
• B) Examine the audited financial statements of the investee company.
• C) Review the broker's advice or canceled check for the investment's acquisition.
• D) Obtain market quotations from The Wall Street Journal or another independent source.

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Definitions:

Discount On Notes

Discount On Notes refers to the difference between the face value of a note and the cash received by the issuer, which is treated as interest expense over the life of the note.

Actuarial Information

Data and analysis related to the calculation of insurance risks and premiums, often involving life expectancy and morbidity rates.

Demolition

The process of tearing down or destroying a building or structure, often to make way for new construction.

Construction Costs

Expenses incurred during the building of a structure or infrastructure, including materials, labor, and other related costs.