A Client's Previous Two Years Financial Statements Understated Estimated Warranty

question 36

Multiple Choice

A client's previous two years financial statements understated estimated warranty payable by $30,000 and $50,000 respectively,immaterial amounts.This year the auditors estimate that the accrual is understated by an additional $60,000.In this year's audit $55,000 represents a material amount.Assuming that the entire understatement is to be recorded,following SEC SAB 108 the decrease in this year's income due to these understatements is:

• A)$0
• B)$60,000
• C)$110,000
• D)$140,000

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Definitions:

Bycatch

Unintentional catch of non-target species while fishing, including fish, birds, and marine mammals, leading to ecological imbalance and wastage.

Allowable Quota

A specified limit or restriction, often set by regulatory bodies, on the amount of a particular resource that can be used, caught, or harvested within a given period to ensure sustainability.

Non-targeted Species

Organisms that are unintentionally affected by human activities, such as pesticides or habitat destruction, which can lead to unintended ecological consequences.

Biosphere Reserves

Protected areas designated to promote and demonstrate a balanced relationship between humans and the biosphere.