An Independent Auditor Has Concluded That Substantial Doubt Remains About

question 28

Multiple Choice

An independent auditor has concluded that substantial doubt remains about a client's ability to continue as a going concern, but the client's financial statements have properly disclosed all of its solvency problems. The auditor would probably issue a(an) :

• A) Unmodified opinion with an appropriate emphasis-of-matter paragraph.
• B) "Except for" qualified opinion.
• C) Standard unmodified opinion.
• D) Adverse opinion.

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Definitions:

Unamortized Acquisition Differential

The portion of the difference between the acquisition cost of an asset and its carrying value on the balance sheet that has not yet been amortized.

Equity Method

A method of accounting whereby an investor records its investment in an associate company at initial cost and subsequently adjusts the carrying amount of the investment to recognize the investor's share of the earnings or losses of the associate.

Amortization

The gradual reduction of a debt or the allocation of the cost of an intangible asset over a period.

Cost Method

An accounting approach for investments where the investment is recorded at cost, and income is recognized only when dividends are received.